Sec 1048

The same distinctions may be taken as to other forms of mental incapacity. Unless there be some positive statute in the way, a contract made bona fide with a lunatic, without notice of his incapacity, will be enforced.3 This is a fortiori the case with drunkards. A man may be so sottishly drunk that it would be a fraud to engage him in business; yet if he endorses a promissory note, he will be bound to a bona fide holder who takes it without notice.4 A person once a lunatic cannot set aside a contract made by him when his mind was clouded without doing equity; and if he had sense enough when he made a bargain to conceal all traces of insanity so that the other contracting party did not suspect such insanity, he cannot have the contract rescinded without paying back any expenses the other party may have incurred in consequence of the transaction. So a party cannot ask to rescind on the ground of drunkenness without offering to repay any damages incurred by the other side. And in general, a party who is compelled to repay before maintaining a bill for specific performance, should be compelled to reimburse in a suit brought against him for negligence.

So as to lunatics and drunkards.

1 See supra, sec 66.

2 So far as concerns malicious injuries, we have already seen that while an infant cannot he made liable on a contract declared on as a tort, it is otherwise when the suit is for damages incurred by deceit when the suit is not based on contract. See supra, sec 52-3.

3 See supra, sec 106.

4 See supra, sec 118.

Sec 1049

We have already incidentally noticed the question whether, when a contract fails from mistake as to its object,1 the party negligently making the mistake is liable for the damage thereby sustained by the other side. The Roman law affirmed this liability in several conspicuous relations. A freeman, for instance, is sold in mistake for a slave. The sale is void; the contract is a nullity; yet, nevertheless, the party undertaking to sell is bound to reimburse to the party undertaking to buy the expenses sustained by the latter.2 - In the same category the Roman law places contracts failing from the non-existence of the object. Such non-existence of a thing assumed by both parties to be existing may occur in cases where the thing never existed at all, or in cases where having existed it has ceased to exist. In the last of these cases the promisor either knew or did not know the fact of the nonexistence. If he did, then he is liable in an action of deceit, if not in an action on a guaranty,3 while no such action would lie should the promisee know of the non-existence.4 Supposing, however, that a party sells a non-existent thing of whose non-existence he ought to have had notice, then he becomes liable for any injury to the other party which his ignorance may have caused. A ship-owner, for instance, sells a ship which is at the time of the sale lost at sea, of which loss the vendor, had he exercised due diligence, would have been aware. In this case the owner would be liable to the other party for the loss accruing to the latter by the disappointment.5 It is true that, in cases where the consideration fails, the money paid may be recovered back;6 but this would not preclude the party injured from suing in tort where there was a tort.1 The same distinction applies to sales of patent or other rights. A vendor negligently sells that to which he has no title. If so, he is liable (irrespective of the question of warranty or other contractual duty) for any damage caused by his negligence.2 It is otherwise, however, when the thing which is sold, though not existing in the power of the vendor at the time of the contract, could be procured by him. In such case the vendor is bound to procure the article, and is liable, not for damages, but contractually for the article itself or its value.3 But however this may be, we have to fall back, in respect to contracts inoperative from essential error as to parties or object, on the rule that, wherever a party seeking to rescind would be required to refund or reimburse the other party before proceeding in his suit, there he may be compelled to refund or reimburse in an action by the other party. The process of recovery may be in an action of money had and received.4 But, if there be a tort involved, he may be held in a suit for damages based on the tort.5

Liability when contract is avoided from mistake as to object.

1 See supra, sec 186 et seq.

2 Ihering, ut supra, Aufsatze, 383 - 4. 3 See supra, sec 302, 315.

4 Supra, sec 303.

5 See supra, sec 309 et seq.

6 Supra, sec 742 et seq.