76

(as, for example, at auction) with an express reservation of the right to resell at the risk and cost of the purchaser in case he does not make payment within a limited time, it is in effect a sale on condition, and the exercise of the reserved right, on the default of the purchaser, rescinds the original sale. This right may also be exercised where a sale is made subject to approval. Thus, where the officers of a bank took certain notes into their possession, paying for them, but with the understanding that the sale was to be subject to the approval of the board of directors, and the latter disapproved the purchase and returned the notes, it was held that the bank was entitled to recover back the money paid." So, a written and signed order for goods, given to the traveling salesman of a wholesale house, and by him sent to his employers, who have the right to accept or reject the same, is no more than an offer to purchase, binding on neither party, until its acceptance; and the mere shipment of the goods does not constitute an acceptance, such as to convert it into a contract binding on the purchaser, when accompanied by an invoice making the terms of payment different from those stated in the order, but the purchaser in this case has the right to refuse to receive the shipment.78 The effect of the bankruptcy of a purchaser under a contract of conditional sale has been considered in another connection. Generally, the seller in a contract of conditional sale is required, on rescinding it, to restore to the purchaser whatever of value he has given. Thus, if a seller of personal property, under a contract which provides that the title shall remain in him until payment of the price, has received in part payment other goods, he cannot, on refusal of the purchaser to pay the balance, maintain replevin for the goods sold without first returning the goods received in part payment.80 So, where a yoke of oxen were sold under a reservation of title in the seller

76 Lamond v. Duvall, 9 Q. B. 1030.

79

77 Attleborough Nat. Bank v. Rogers, 125 Mass. 339.

78 Baird v. Pratt, 148 Fed. 825, 78 C. C. A. 515, 10 L. R. A. (N. S.) 1116.

79 Supra, § 329.

80 Latham v. Davis (C. C.) 44 Fed. 862.

until payment, which was to be made in work and labor, and, after part performance by the buyer, the oxen came again into the hands of the seller, who refused to redeliver them without additional security for the price, it was held that such refusal was a disaffirmance of the contract, and that the buyer was thereupon entitled to recover for the work he had done.81 The right of rescinding a conditional sale may also belong to the buyer, as, for instance, where the property sold proves to be worthless for its intended purpose and not in accordance with the vendor's representations as to its condition and quality."

81 Martin v. Eames, 26 Vt. 476.

82 Tufts v. Cheatham, 75 Ga. 865. See Freeman v. Keane (Miss.) 49 South. 567.

CHAPTER XXI

SALE AND EXCHANGE OF REAL PROPERTY

414. Modification by Subsequent Agreement.

415. Same; Extension of Time for Payment or Performance.

416. Option or Reserved Right to Rescind.

417. Rescission by Mutual Agreement.

418. Right to Rescind in General.

419. Fraud and False Representations.

420. Same; As to Title, Interest, or Estate.

421. Misrepresentation or Concealment of Incumbrances.

422. Same; Existence of Prior Contract to Convey.

423. Same; As to Quantity, Boundaries, or Location.

424. Same; As to Value of Property.

425. Same; As to Quality, Condition, and Improvements.

426. Same; As to Timber and Mineral Resources.

427. Rescission for Failure or Defect of Title in General.

428. Application of Rule of Caveat Emptor.

429. Certainty and Materiality of Defect.

430. Offer of Doubtful Title.

431. Allowance of Reasonable Time to Make Title.

432. Vendor Disabling Himself to Convey.

433. Defects Cured or Curable Before Conveyance.

434. Defects Cured After Notice of Rescission but Before Decree.

435. Disturbance of Purchaser or Danger of Eviction.

436. Failure of Title as to Part of Land Conveyed.

437. Grounds for Equitable Relief.

438. Waiver, Estoppel, or Default of Purchaser.

439. Rescission by Vendor for Non-Payment of Purchase Money. 440. Same; Deferred and Installment Payments.

441. Rights and Duties of Parties on Rescission. 442. Exchange of Properties.

§ 414. Modification by Subsequent Agreement. It is competent for the parties to an executory contract for the sale or exchange of real estate to change or modify their agreement in any particular, by mutual consent, and when this is done, it constitutes a waiver or abandonment of rights and obligations under the original contract in so far as they are affected by the new agreement.1 Thus, after an oral agreement for the sale of a lot and the giving of a receipt for the first payment, showing the terms of the sale, and the delivery of possession to the vendee on full pay

1 Bryant v. Stephens, 58 Ala. 636; Heddleston v. Stoner, 128 Iowa, 525, 105 N. W. 56; Wolfe v. Potts (Tenn. Ch. App.) 42 S. W. 188.

ment of the price, the vendor refused to give a deed on account of certain unadjusted matters between the parties. Thereupon a formal contract was executed for the settlement of all financial matters between them, and it was held that their rights under the former agreement were merged in this contract, so that ejectment could not be maintained against the purchaser until he failed to perform its terms.2 So, one who has made a deed and placed it in escrow, to be delivered on payment of a note given for the purchase money, may waive his rights under the original agreement, and allow the deed to be delivered before payment of the note. And the parties may agree to the substitution of the purchaser's wife as grantee in his place, and may convert an agreement for the sale of land into a lease of it."

If the subsequent arrangement of the parties merely modifies their original agreement in details, without amounting to a new contract such as may be supposed to supersede and annul the first, it may rest in parol, provided the evidence to establish it is clear and satisfactory," or at any rate, a parol modification of a written contract for the sale of land, followed by delivery and acceptance of a deed in accordance therewith, constitutes an alteration of the written contract by an executed parol agreement." Thus, a vendor of real estate who retains the legal title as security for the payment of the purchase money may, by subsequent oral contract with the purchaser, annex further conditions to his obligation to convey. And a written contract for the sale of land on monthly payments may be changed by parol so as to allow the purchaser to pay the entire consideration at once and demand immediate delivery of the deed. So, a vendor who has agreed in writ

2 Hutchinson v. Coonley, 209 Ill. 437, 70 N. E. 686.

8 Smith v. Goodrich, 167 Ill. 46, 47 N. E. 316.

4 Jughardt v. Reynolds, 68 App. Div. 171, 74 N. Y. Supp. 152.

6 Unger v. Unger, 65 Ohio St. 495, 63 N. E. 67.

• Prairie Development Co. v. Leiberg, 15 Idaho, 379, 98 Pac. 616;

Womble v. Wilbur, 3 Cal. App. 527, 86 Pac. 921.

7 Benesh v. Travelers' Ins. Co., 14 N. D. 39, 103 N. W. 405.

8 Alemania Loan & Building Co. v. Frantzreb, 56 Ohio St. 493, 47

N. E. 497.

Anderson v. Moore, 145 Ill. 61, 33 N. E. 848.

ing to make title in thirty days may show that the vendee afterwards orally agreed to accept his bond for title instead.10 And where the object of the later agreement is merely to correct an error in the first contract, in respect to the amount of land to be conveyed, the purchaser's assent to it may be inferred from his payment of the price and acceptance of a deed for the correct quantity.11 But on the other hand, where a contract for the sale of land provided for a return of the earnest money to the purchaser in case the title should prove defective, it was held that a subsequent parol agreement that, if the title should be defective, the vendor should perfect it and then convey to the purchaser, was ineffective for the purpose of introducing so material a change into the written contract.12 And an agreement in writing to convey such lots as the grantor shall select cannot be changed by parol so as to require the grantor to convey such lots as the grantee may select.13 And further, if the new agreement amounts to a new contract which supersedes the original agreement, or if it introduces new and material terms or conditions into it, it must be based upon a new consideration in order to be legally binding.1

14

But a subsequent agreement of the parties in relation to a matter which is merely incidental or collateral to their original contract, but is not essentially a part of it, does not constitute a new contract, within the meaning of the rules above stated.15 This is true, for example, of an agreement merely as to the manner in which each party shall perform his obligations under the original contract, as where the

10 Cooke v. Cook, 100 Ala. 175, 14 South. 171.

11 Benesh v. Travelers' Ins. Co., 14 N. D. 39, 103 N. W. 405. 12 Reiff v. Coulter, 47 Wash, 678, 92 Pac. 436.

221.

13 Wildbahn v. Robidoux, 11 Mo. 659; Emery v. Mohler, 69 Ill.

14 Hicks v. Revels, 142 Ga. 524, 83 S. E. 115; Friermood v. Pierce, 17 Ind. 461; Pelley v. Walker, 79 Iowa, 142, 44 N. W. 346; Pancoast v. Dinsmore, 105 Me. 471, 75 Atl. 43, 134 Am. St. Rep. 582; Tucker v. Dolan, 109 Mo. App. 442, 84 S. W. 1126; Norris v. Letchworth, 140 Mo. App. 19, 124 S. W. 559; Jughardt v. Reynolds, 68 App. Div. 171, 74 N. Y. Supp. 152.

15 Strong v. Doyle, 110 Mass. 92. And see Rigdon v. Shirk, 127 Пll. 411, 19 N. E. 698; Grant v. Beronio, 97 Cal. 496, 32 Pac. 556. 16 Stewart v. Gillett, 79 Misc. Rep. 93, 139 N. Y. Supp. 583.