the object and purpose of the document in which they occur must necessarily be frustrated. General words are always construed so as to give effect to, and not so as to destroy, the expressed intentions of those who use them." 24

§ 1826. Elements of rescission by parol agreement.

The discharge of a contract by the parol agreement of the parties would seem on principle to require the same elements of mutual consent and consideration that are necessary for the formation of simple contracts; and certainly this is the general rule.

If the parties to a bilateral contract agree to rescind it there is no difficulty in regard to consideration, whether the agreement to rescind is made before or after the breach of the original contract, so long as neither party has completely performed or been discharged from his obligation. The promise of one party to forego his rights under the contract is sufficient consideration for the promise of the other party to forego his rights. 25

The agreement to rescind need not be express. Mutual assent to abandon a contract, like mutual assent to form one, may be inferred from circumstances. 26 Therefore, "If either

24 Re Perkins, [1898] 2 Ch. 182, 190. To the same effect are Payler v. Homersham, 4 M. & S. 423; Lindo v. Lindo, 1 Beav. 496; London &c. Ey. Co. v. Blackmore, L. R. 4 H. L. 610; Turner v. Turner, 14 Ch. D. 829; Texas & Pac. R. v. Dashiell, 198 U. S. 521, 49 L. Ed. 1150, 25 Sup. Ct. 737; Gold Hunter Min. &c. Co. v. Bowden, 252 Fed. 388, 164 C. C. A. 312; Tryon v. Hart, 2 Conn. 120; Seymour v. Butler, 8 Ia. 304; Rich v. Lord, 18 Pick. 322; Wiggin v. Tudor, 23 Pick. 434; Hoes v. Van Hoesen, 1 Barb. Ch. 379; Matlack's Appeal, 7 Watts & S. 79; Heiser v. Reynolds (Pa.), 106 Atl. 888. See also Danby v. Coutts, 29 Ch. D. 500, and supra, § 1551. Cf. especially with Turner v. Turner, supra, Dorman v. Dorman, 185 Mass. 153, 69 N. E. 1043.

25 King v. Gillett, 7 M. & W. 55; Farrar v. Toliver, 88 Ill. 408; Rollins v. Marsh, 128 Mass. 116; Brigham v. Herrick, 173 Mass. 460, 467, 53 N. E. 906; Blagborne v. Hunger, 101 Mich. 375, 59 N. W. 657; Bandman v. Finn, 185 N. Y. 508, 78 N. E. 175, 12 L. R. A. (N. S.) 1134; Spier v. Hyde, 78 N. Y. App. Div. 151, 158, 79 N. Y. S. 699; Enderlien v. Kulaas, 25 N. Dak. 385, 141 N. W. 511; Dreifus v. Columbian Salvage Co., 194 Pa. 475, 486, 45 Atl. 370; Blood v. Enos, 12 Vt. 625; Tacoma &c. Lumber Co. v. Field, 100 Wash. 79, 170 Pac. 360, 362; Montgomery . American Central Ins. Co., 108 Wis. 146, 159, 84 N. W. 175.

26 Green v. Wells, 2 Cal. 584; Mark v. Stuart-Howland Co., 226 Mass. 35, 41, 42, 115 N. E. 42; Heinlin v. Fish, 8 Minn. 70; Fine v. Rogers, 15 Mo. 315;

party without right claims to rescind the contract, the other party need not object, and if he permit it to be rescinded, it will be done by mutual consent." 27 Sometimes circumstances of a negative character, such as the failure to take any steps looking towards the enforcement or performance of the contract, justify the inference of mutual assent to rescind. 28 Also "a subsequent contract completely covering the same subjectmatter, and made by the same parties, as an earlier agreement, but containing terms inconsistent with the former contract, so that the two cannot stand together, rescinds, substitutes, and is substituted for the earlier contract and becomes the only agreement of the parties on the subject." 29 But the subsequent agreement must have sufficient consideration. Therefore if the undertaking by one party is simply to perform the whole or part of what he promised in the original contract, it

Chouteau v. Jupiter Iron Works, 94
Mo. 388, 7 S. W. 467; Wheeden v.
Fiske, 50 N. H. 125; Schwartzreich v.
Bauman-Basch, Inc., 172 N. Y. S. 683.
See also cases cited in the following
two notes.

27 Woodard v. Willamette Valley &c. Land Co., 89 Oreg. 10, 173 Pac. 262, 264, quoting 2 Parsons Cont. *678, and citing Moline Jewelry Co. v. Crew, 171 Ala. 415, 55 So. 144; McKenna v. McKenna, 118 Ill. App. 240; Ralya v. Atkins, 157 Ind. 331, 61 N. E. 726; Kingman Colony v. Payne, 78 Oreg. 238, 152 Pac. 891. It should be observed that this is not an acceptance of the common but misleading expression that any material breach or a repudiation by a party to a contract is an offer to rescind. It is a pure question of fact whether such an inference can be drawn. See supra, § 1302.

28 Hobbs v. Columbia Falls Brick Co., 157 Mass. 109, 31 N. E. 756; Mowry v. Kirk, 19 Ohio St. 375.

29 Housekeeper Pub. Co. v. Swift, 97 Fed. 290, 38 C. C. A. 187. See in accord, Patmore v. Colburn, 1 C. M. & R. 65, 71; McCabe Const. Co. v. Utah Const. Co., 199 Fed. 976; Mobile

Electric Co. v. Mobile (Ala.), 79 So. 39; Stow v. Russell, 36 Ill. 18, 30; Harrison v. Polar Star Lodge, 116 Ill. 279, 287, 5 N. E. 543; Hayes v. Carey, 287 Ill. 274, 122 N. E. 524; Holbrook v. Electric Appliance Co., 90 Ill. App. 86; Western Ry. Equipment Co. v. Missouri Iron Co., 91 Ill. App. 28, 37; Thompson v. Elliott, 28 Ind. 55; Paul v. Meservey, 58 Me. 419; Howard v. Wilmington &c. R. Co., 1 Gill, 311, 340; Smith v. Kelly, 115 Mich. 411, 73 N. W. 385; Chrisman v. Hodges, 75 Mo. 413, 415; Tuggles v. Callison, 143 Mo. 527, 536, 45 S. W. 291; McClurg v. Whitney, 82 Mo. App. 625; McDowell v. Hemming Mfg. Co., 91 N. J. L. 209, 102 Atl. 680; Renard v. Sampson, 12 N. Y. 561, 568; Bandman v. Finn, 185 N. Y. 508, 78 N. E. 175, 12 L. R. A. (N. S.) 1134; McKeogh v. Browning, 125 N. Y. S. 368; Gaylord v. McCoy, 161 N. C. 685, 77 S. E. 959; Robert Grace Contracting Co. V. Norfolk &c. Ry. Co., 259 Pa. 241, 102 Atl. 956; Runnion v. Morrison, 71 W. Va. 254, 76 S. E. 457. Cf. Rhoades v. Chesapeake &c. R. Co., 49 W. Va. 494, 39 S. E. 209, 55 L. R. A. 170, 87 Am. St. Rep. 826.

will not support a promise by the other party to perform what he had previously agreed and something more.30 Nor (what is substantially the same thing) can an existing contract be altered by mutual assent by an agreement merely to give one party a right or privilege, or subject the other party to a burden which he did not have previously.31

A contract not infrequently reserves to one of the parties a right to rescind it under certain circumstances or by certain action. For one party to exercise such a right without the assent of the other, it is essential that the provisions of the original reservation be strictly followed.32 But such a provision like any other term in a contract may itself be rescinded by mutual assent, and, therefore, no limitation is imposed by it on the power of the parties to rescind by mutual agreement.33

§ 1827. Restoration of the status quo.

Where at the time of rescission of a bilateral contract it has been partly performed on one or both sides, the parties may agree simply to forego further performance and let past matters stand where they are, or they may agree not only to forego future performance but to restore the original status by returning payments already made or paying for other performance which has been rendered. Which of these contracts the parties in a particular case have made can depend on no rule of law, but on a determination of what the terms of their contract in

30 Brown v. Lowndes County (Ala.), 78 So. 815. See supra, § 130.

31 Main St., etc., R. Co. v. Los Angeles Traction Co., 129 Cal. 301, 61 Pac. 937; McCrary v. Thompson, 123 Mo. App. 596, 100 S. W. 535; Patterson v. American Ins. Co., 164 Mo. App. 157, 148 S. W. 448; Hasbrouck v. Winkler, 48 N. J. L. 431, 6 Atl. 22; Bishop v. Smith (N. J. L.), 57 Atl. 874; Clark v. Ulster, etc., R. Co., 189 N. Y. 93, 81 N. E. 766, 13 L. R. A.(N. S.) 164, 121 Am. St. Rep. 848, 12 Ann. Cas. 883; Purdy v. Rome, etc., R. Co., 52 Hun, 267, 5 N. Y. S. 217, affd. 125 N. Y. 209, 26 N. E. 255, 21 Am. St. Rep.

736; Fanger v. Caspary, 87 N. Y. App. Div. 417, 84 N. Y. S. 410; Thurston v. Ludwig, 6 Ohio St. 1, 67 Am. Dec. 328; Gulf, etc., R. Co. v. McCarty, 82 Tex. 608, 18 S. W. 716; Cotulla v. Barlow (Tex. Civ. App.), 115 S. W. 294; Thomas v. Mott, 74 W. Va. 493, 82 S. E. 325.

32 King v. Towsley, 64 Iowa, 75, 19 N. W. 859; Avery Planter Co. v. Peck, 80 Minn. 519, 83 N. W. 455, 1083; Wright v. Bristol Patent Leather Co., 257 Pa. 552, 101 Atl. 844; Ward v. American Health Food Co., 119 Wis. 12, 96 N. W. 388. 33 See infra, § 1828.

fact were; 34 and if that contract while providing for cessation of further performance, does not provide for the return of past payments or compensation for past performance, there can be no recovery of such payments or compensation, for the burden of proving any right is on one who asserts it.35 When a court says:

'As a general rule when the contract for the sale of land has been rescinded by the mutual assent and agreement of the parties, the contract is at an end, and, there being no agreement to the contrary, the vendee, not being at fault, may recover back the money paid on his contracts," 36 it can only be replied that there is no reason why an agreement to rescind a contract for the sale of land should be subject to any other rule than an agreement to rescind any other contract, and that to allow recovery of such payments on rescission of any contract by an agreement which does not provide for it is unwarrantably adding a term to the agreement of the parties. If the principle is sound not only payments made but property transferred or services rendered under any kind of contract should likewise form the basis of recovery where the parties agree to forego further performance of a partially executed contract. Of course, a contract to restore the original status like any other contract need not be in express terms, but to justify an action to restore that status on rescission of a contract by mutual assent, it must be found on a fair interpretation of the words or acts of the parties that they expressed an intention that that status be restored.

§ 1828. Written contracts may be varied by subsequent oral agreement.

A contract in writing, but not required to be so by the Statute

24 Eames Vacuum Brake Co. v. Prosser, 157 N. Y. 289, 51 N. E. 986.

35 Ibid.

as Woodard v. Willamette, etc., Land Co., 89 Or. 10, 173 Pac. 262, 264, citing 2 Black on Rescission, § 535; 2 Warvelle on Vendors, § 826; 13 C. J., § 627, p. 602; 39 Cyc. 2029; Vider v.

Ferguson, 88 Ill. App. 136, 150; Bannister v. Read, 1 Gilman (6 Ill.) 92. 100; Bryson v. Crawford, 68 Ill. 362; Prentice v. Erskine, 164 Cal. 446, 129 Pac. 585; Cummings v. Rogers, 36 Minn. 317, 30 N. W. 892; Maffet v. Ore. & Cal. R. Co., 46 Oreg. 443, 457, 80 Pac. 489, 494. See also Strang v. Person (Wash.), 185 Pac. 944.

37

of Frauds may be dissolved or varied by a new oral contract, which may or may not adopt as part of its terms some or all of the provisions of the original written contract. It is also true that if the agreement to discharge or vary a contract is made after its breach, it is immaterial whether the original bargain was or was not in writing. The later agreement is an accord, and if the parties so intend will operate at once without performance to discharge the liability for breach of the original contract. 38

Unless the original contract was under seal (and the local law still preserves the common-law prohibition against varying sealed instruments by parol), or is required by the Statute of Frauds to be in writing, an executory oral agreement is as effectual to rescind the earlier contract or to substitute a new one as if it were executed. 38a A failure to observe the reason why neither sealed instruments nor contracts within the Statute of Frauds can be varied by oral executory agreements has sometimes led to broad statements that written contracts can be altered only by another written contract, or by an executed oral agreement, 386 and the California Civil Code so provides, 38

37 Goss v. Lord Nugent, 5 B. & Ad. 58, 64; Swain v. Seamens, 9 Wall. 254, 271, 19 L. Ed. 554; Teal v. Bilby, 123 U. S. 572, 578, 31 L. Ed. 263, 8 S. Ct. 239; American Fine Art Co. v. Simon, 140 Fed. 529, 72 C. C. A. 45; Pioneer Savings Co. v. Nonnemacher (Ala.), 30 So. 79; Calliope Min. Co. v. Herzinger, 21 Col. 482, 42 Pac. 668; Ward v. Walton, 4 Ind. 75; Walter v. Victor G. Bloede Co., 94 Md. 80, 85, 50 Atl. 433; Cummings v. Arnold, 3 Metc. 486, 489, 37 Am. Dec. 155; Freedman v. Gordon, 220 Mass. 324, 107 N. E. 982; Barton v. Gray, 57 Mich. 622, 24 N. W. 638; Grand Traverse, etc., Exchange v. Thomas Canning Co., 200 Mich. 95, 166 N. W. 878; Van Santvoord v. Smith, 79 Minn. 316, 82 N. W. 642; Chouteau v. Jupiter Iron Works, 94 Mo. 388, 7 S. W. 467; Warren v. Mayer Mfg. Co., 161 Mo. 112, 121, 61 S. W. 644; Bandman v. Finn, 185 N. Y. 508, 78 N. E. 175, 12 L. R. A. (N. S.)

1134; Zanello v. Smith & Watson Iron Works, 62 Oreg. 213, 124 Pac. 660; Robert Grace Contracting Co. v. Norfolk, etc., Ry. Co., 259 Pa. 241, 102 Atl. 956; Bryan v. Hunt, 4 Sneed, 543, 70 Am. Dec. 262; Montgomery v. American Ins. Co., 108 Wis. 146, 159, 84 N. W. 175.

38 See infra, § 1846.

38 See cases cited supra, n. 37.

386 See Northern Wyoming Land Co. v. Butler, 252 Fed. 971, 973, 164 C. C. A. 479. As the contract in this case was for the sale of land, the rule was there accurate.

38c Sec. 1698. This unfortunate legislative adoption for written contracts of a rule borrowed from the law governing sealed instruments, and now generally relaxed even as to them (infra, § 1849) has led the California court to a somewhat difficult distinction. An oral variation of a written contract is held bad, but a new