poration to enter into contracts may be defined or limited in the instrument of incorporation. Where this is not the case regard must be had to its constitution and purposes. In the case of limited companies, the powers of contracting are defined in the "memorandum of association." A contract which is beyond the powers of a corporation is said to be ultra vires and is void.

§ 51. Form of Contracting.—As a general rule, a corporation can bind itself by contract only by a deed, i.e. by a writing under the common seal. To this there are many exceptions. Where the matter is of slight importance or of frequent occurrence the seal is not necessary. Hence the agent of a corporation may engage clerks, and the guardians of a poor law union may order ordinary provisions for a workhouse, by word of mouth. Trading corporations may enter into contracts in the usual course of business without the corporate seal (§ 65).

LUNATICS

§ 52. Contracts for Necessaries.-Every person is presumed to be of sound mind until the contrary appear. It may, however, occur that one of the parties to a contract is of unsound mind, and the question arises what effect has this on the contract or on the capacity to contract. By unsound mind is meant incapable of understanding the effects of the contract.

A contract for the supply of necessaries to a lunatic or his wife is good. The debt is chargeable against the lunatic's estate. By necessaries is meant articles necessary to the estate and condition of the lunatic.

§ 53. Contracts during Lucid Intervals.-A lunatic differs from an idiot in that he may at times have lucid intervals, i.e. be perfectly sane. During such intervals he can enter into a contract. But so long as the insanity lasts the lunatic is regarded as incapable of understanding the nature and consequences of any legal act. Some authorities have thought that if a lunatic enters into a contract, the

fact of the lunacy being known to the other party, the contract is absolutely void, i.e. it has no legal effect whatever. But the better opinion seems to be that the lunatic on attaining a lucid interval may either adopt or confirm the

contract.

§ 54. Contracts without Notice of Insanity.—Where a person contracts with another without any notice of insanity, the contract is valid. Hence where a person of unsound mind bought annuities from an insurance company, and the company had no knowledge of the insanity, it was held after the death of the lunatic that the purchase ought not to be set aside.

§ 55. Contracts with Notice of Insanity.—A contract made with a person of unsound mind by a person knowing of such unsoundness of mind is voidable. By "voidable" is meant that if an action be brought against the lunatic to enforce the contract, proof of lunacy will be a good defence.

§ 56. Effect of Insanity subsequent to a Contract.The fact that one of the parties to a contract becomes insane subsequent to the making of the contract, does not as a rule affect its validity. But the insanity of a principal revokes the authority of the agent, and the insanity of a person engaged to be married releases the other from the contract to marry.

§ 57. Drunkenness. A person who by reason of drunkenness has placed himself in a condition analogous to insanity, is regarded, as far as the capacity to contract is concerned, as of unsound mind. The same rules apply as in the case of lunacy. If therefore a person enters into a contract with another, knowing him to be so drunk as not to understand what he is doing, such contract is voidable by the party of whom advantage has been taken.

CHAPTER III

THE FORM OF AND CONSIDERATION FOR CONTRACTS

§ 58. Classes of Contracts.-An agreement, in order to be enforceable as a contract, must be entered into before a Court of Record, or be under seal, or be supported by a consideration. Hence there are three classes of contracts in English law: (1) contracts of record, (2) contracts under seal, and (3) simple contracts. Certain contracts belonging to the last mentioned class require, in addition to a consideration, that they should be embodied in a certain form, e.g. in writing. Simple contracts may therefore be divided into two sub-classes: (1) those requiring, (2) those not requiring a special form.

CONTRACTS OF RECORD

§ 59. What is a Record ?—A record is a memorandum of a Court of Record entered on the rolls of the court. Certain entries on the rolls are regarded as amounting to a contract. The record proves itself, and no evidence to the contrary is admitted.

§ 60. Judgment Debts.-The only contract of record that requires notice here is a judgment recovered in an action. If one man brings an action for the price of goods and obtains judgment, such judgment is entered on the rolls of the court, and is said to give rise to a debt or contract of record between the plaintiff and defendant.

A

judgment debt has now no priority over an ordinary debt in the administration of the assets of a deceased person.

CONTRACTS UNDER SEAL

§ 61. How entered into.—A contract under seal is entered into by the delivery of a written or printed document bearing the seal of the person making delivery. If both parties are to be bound, the document should bear both their seals. It follows that a contract under seal requires three requisites: (1) writing or printing, (2) sealing, and (3) delivery. Signing may be added as a fourth requisite, though there is good reason for saying that, except in certain special contracts, it is not absolutely essential. The document is usually called a deed.

A deed ought to be written or printed on paper or parchment, and not upon wood or cloth, but it is immaterial whether the contents be written or printed, or whether a pen or pencil be used.

§ 62. Sealing.-The deed must bear the seal or seals of the party or parties to be bound. The use of sealing wax and of a seal to make an impression on the wax is unnecessary; a wafer or an impression made by an instrument is sufficient.

§ 63. Signing.-The signatures of the parties ought always to be added to a deed, but by law they are only absolutely essential in certain cases.

§ 64. Delivery.-The "delivery" of the deed makes the deed take effect as regards the party making the delivery. The actual handing over of the deed is the simplest form of delivery, but the use of any words indicating that the person wishes the deed to become operative will amount to delivery.

Usually the seals are affixed beforehand, and the party executes the deed by placing his finger on the seal, saying, "I deliver this as my act and deed." This amounts to both sealing and delivery. The importance of delivery lies

in the fact that the moment it takes place the deed takes effect.

The delivery may be made conditionally, and then the deed does not take effect until the condition is performed. Until such performance the deed is called an escrow.

If any of the material parts of a deed are omitted and delivery is made, the deed is void and the omissions cannot be subsequently supplied. The document when completed should be re-executed. The omission of an immaterial part, such as the date, will not invalidate a deed.

Shares in limited companies are usually transferable by deed. Sometimes the deed of transfer is executed without the name of the purchaser being inserted. Such a transfer does not pass a legal title to the shares, though it may give a right to have the shares duly transferred. The practice of the Stock Exchange in allowing the purchasing broker to fill in the name of the buyer, is not recognised by the

courts.

§ 65. Contracts that required to be made under Seal.-In ordinary commercial transactions, such as the selling and buying of goods, it is not necessary to use a deed. But in the following cases the contract must be made under seal :

1. Contracts transferring shares in companies.

By the Companies Act of 1862, section 22, shares in companies subject to the Act are to be transferred in the manner provided by the regulations of the Company. As a general rule such regulations require a deed for every transfer.

2. A contract transferring a British ship. Merchant Shipping Act, 1854, s. 55.

3. A contract for the sale of a piece of sculpture with copyright. 54 Geo. 3, c. 56.

4. Contracts entered into with corporations. A corporation such as a municipal corporation or a joint stock company is regarded as an "artificial person.” In other words, the corporation itself has to be distinguished from the persons composing it. Every corporation has its own special seal, and the presence on a document of an impres