Sec 1044

The liability of a party who by his negligence leads another into a prejudicial negotiation of this class, graph office the following dispatch, addressed to a Frankfort house: "Sell (Verkanfen) 1600 shares Austrian loan," etc. The message was changed in transmission into "Buy (Kaufen)," etc. - The Frankfort house, instead of selling, bought the number of shares designated, which in the mean time fell heavily in the market. According to the strict rule of the Roman law, as prevailing in Germany, there was no contract between the Cologne and the Frankfort houses; and it was consequently argued that the loss must fall on the Frankfort house. The court, however, thought otherwise; holding that if there was any negligence in the Cologne house, it must bear the loss; though if the negligence was that of the telegraph company the latter must ultimately be responsible - This is sub-stantially adopting the rule of the text. and the same distinction is taken by Vangerow, sec 109, and Windscheid, sec 307, and is sustained by several German adjudications. Seuffert, Archiv, Bd. 21, N. 29. Bahr proposes another solution of the difficulty: The rule that there is no contract where there is no actual union of minds as to a specific thing, cannot be sustained, he argues, if we view the mind only subjectively, limiting ourselves to its inner operations. The intention can only be measured by the outer expression taking the form of words or signs; and a party using such words or signs precludes himself from denying that they have the meaning they ordinarily bear. Hence the principle that a party will not be permitted to deny that he is bound by expressions by dependence on which another party dealing with him contractually suffers detriment. The party who uses such expressions undesignedly is bound to the same effect as if they had been actually designed. (Er haftet aus der ausseren Erschein-ung seines Willens gerade so, als ob er wirklich gewollt babe.) Bahr admits that this rule (which is substantially that of equitable estoppel as maintained in our own jurisprudence) is not to be found explicitly stated in the Roman classical standards. He argues, however, that the rule is practically recognized in numerous cases, of which he cites the following: is maintained with great skill and force by Ihering, a distinguished German jurist.1 The prevalent doctrine that essential error avoids a contract, he accepts; but he urges that the party causing the error should been read. The fact that such a party is not cognizant of these conditions does not relieve him from them should he purchase at the sale.

1. The prior revocation of a mandate does not cancel a contract made by the agent with a bona fide purchaser, who was notified of the mandate but not of its revocation.

2. The same rule is adopted as to the institor. Business contracts made by the institor bind the principal to parties dealing bona fide and non-negli-gently with the institor, though it may happen that the institor's authority has been secretly revoked by the principal before the transaction.

3. Contracts made in pursuance of a general power of attorney, also, are not made inoperative by the fact that prior to the contract the powers of the attor ney were secretly recalled.

4. A party who contracts with a public institution, accepting, for instance, proposals published by such institution, is bound by the limitations of such proposals, though he may not have acquainted himself with their details. There was no actual concurrence of minds, though there is a contract. In this, as in the prior cases, we have to resort to the fiction of concurrence - the "Einwilligung wird fin-girt.".

5. So of a party coming to a public auction after the conditions of sale have be made liable for the consequences. If this be not conceded, not only injustice, but "practical hopelessness" would follow.

Liability of party to void contract affirmed in Roman law.

6. A party, also, who signs a document, will not, as against a bona fide purchaser or holder, he permitted to say that he did not know what the document contained.

7. No matter how solemnly a party may protest in private that he is not bound by a contract duly executed by him, this mental reservation is no defence.

8. Questions of interpretation are questions of intention (Interpretations-fragen sind Willensfragen). But this intention is not to be divined by the adjudicating tribunal on purely subjective grounds. The logical interpretation, so Ihering argues, rests on the hypothesis that the true intention is cognizable, both by the other party and by the court. The court cannot take notice of facts which were not known and could not have been known to the other party. The test is, not what the party making the proposal meant, but what the other party must, under the circumstances, have supposed him to have meant. It is maintained by Bahr that this is equivalent to saying that a proposal is to be determined not by the party's private intention, but by the outer appearance (aus-seren Erscheinung) of the particular case, and the requisite intention is inferred from the facts, so that when not actually existing (vorhanden) it is feigned (fingirt).

It is conceded by Bahr that a party, in order to set up his bona fide interpretation of a proposal, must have acted non-negligently and fairly. In other words, the fiction of a non-existing intention on the part of the proposing party can only be set up by a party accepting non-negligently and in good faith. On the other hand, the party proposing cannot relieve himself from liability by setting up bona fides.

In the text (infra, sec 1051) is given the case of a singer who is engaged by the director of a theatre in mistake for her sister, in which case Ihering, on the assumption that the engagement does not constitute a valid contract on account of essential error as to the object of the contract, maintains that the director is bound to reimburse the singer on the ground of culpa in contrahendo. Bahr, on the other hand, holds that if the singer entered into the contract non-negligently and honestly, the director is bound. Bahr calls attention to errors in respect to currency, and says that in such matters the, local meaning must prevail, no matter what may have been the intention of one of the parties; and this is undoubtedly so unless the intention is based on the mistake of such party, such mistake not being shared by the other party. Bahr goes on to say, with much acuteness, that nullity on account of essential error as to object is limited to cases where the error was more or less open to inspection, so that each party is to blame, and neither party should have placed on him the burden of a contract as to which both should have seen there was an essential misapprehension. Cases of this class, however, are not frequent, which accounts for the rarity of the decisions in which contracts are annulled on account of essential errors. Thousands of suits, so he states, depend each year on the question of the intention of the parties to a contract. One party maintains that he meant one thing: the other party maintains that he meant another thing. Now, if contracts are nullities when the contracting parties have different intentions, why do we not have in such cases rulings, as numerous as the cases, that no contract existed? So far from such being the case, Bahr declares that every practitioner will concur with him in the statement that such decisions are, as a rule, unknown. In his own long practice, he states that he was concerned in but a single case in which a contract was annulled on account of essential error. A painter (Farber) in Kassel made inquiries, in 1842, of a merchant in Hanover for indigo. The merchant sent samples, designating the price per pound. The painter ordered three boxes at the designated price, "pr. dortiges Ge-wicht." In Hanover, down to 1835, a heavier standard obtained; in that year the lighter Cologne standard was adopted. The purchaser, on receiving the goods, refused to pay, on the ground that on giving the order he had the old Hanover heavy standard in mind, while the vendor had delivered according to the lighter standard. The appellate court held that the contract was a nullity on account of error in object; but this, as Bahr argnes, may be sustained on the ground that the vendor was bound to have known what the purchaser meant by "dortiges Ge-wicht." Bahr states that this is the only case of annulling on ground of error to be found in the German reports of Seuffert or of Strippelmann. In other words, he argues, the rule as to error, though speculatively true, is of very rare practical interest, since the cases are almost unknown in which a party who makes an error is not (supposing there be no fraud) precluded by his own negligence from setting it up. And this coincides with our own rule of equitable estoppel. A party who, by his negligent error, leads another bona fide to contract with him, cannot set up his error to avoid the contract.