Law of Contract

ATTORNEYS-AT-LAW PRELIMINARY YEAR EXAMINATION

COMPILATION – RIKAZ RIFFARD

ATTORNEY-AT-LAW, LLB (HONS) (LONDON)
CONTACT - 0776601016
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SUBJECT AREAS

1. OFFER

2. ACCEPTANCE

3. CONSIDERATION & JUSTA CAUSA

4. MISREPRESENTATION

5. TERMS / CONDITIONS / WARRANTIES / UCTA / EXCLUSION CLAUSES

6. DAMAGES

7. INTENTION TO CREATE LEGAL RELATIONS

8. OBJECTIVE & SUBJECTIVE TEST

9. UNENFORCEABLE CONTRACTS (VOID / VOIDABLE / ILLEGALITY)

10. CAPACITY TO CONTRACT (MINORITY / LUNACY / PRODIGALITY /

DRUKENNESS)

11. MISTAKE

12. DURESS

13. UNDUE INFLUENCE

14. FORM

15. REMEDIES

16. QUANTUM MERUIT

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6. DAMAGES

Damages are not available for undue influence but of a bank has broken a duty of care damages may be
available in negligence under – Hedley Byrne v Heller

Laesio enormis is a Roman Dutch law concept applicable to rescind sales where the damage suffered is
more than half the value of the subject matter. This concept enables persons to get back their lands for less
than half its real value. A similar privilege is granted to persons who pay more than double the value to
rescind the contract unless the excess sum paid as price is returned – Gooneratne v Don Philip S; Bodigar
v Nagoor; Ratwatte v Goonesekera

Laesio enormis will not apply:

a) Where the price is fixed deliberately law out of affection

b) Where the sale is by court
c) Where the party suffering the loss was fully aware of the true value; and
d) Where the party waives the option to contest

The innocent party is relived from further liability and he may sue the party in breach for:

(a) Damages or for the value of the work already done

(b) Where damages are inadequate he may seek the equitable remedies of specific performance or
injunctions.

Purpose: damages are meant to compensate the injured party for any consequences of the breach
of contract. The underlying principle is to put the injured party financially as near as possible into the
position he would have been in had the promise been fulfilled

Remoteness of damage: not every type of damage caused to the plaintiff as a result of the breach
of contract will be recoverable. If the loss flowing from the breach of contract is too remote then it
cannot be recovered. Losses, to be recoverable, must have been within the reasonable
contemplation of the parties.

Hadley v Baxendale – Plaintiffs operated a mill, and a component of their steam engine broke
causing them to shut down the mill. Plaintiffs then contracted with Defendants, common carriers, to
take the component to W. Joyce & Co. to have a new part created. When delivery was delayed due
to Defendants’ neglect, causing Plaintiffs’ mill to remain closed longer than expected, Plaintiffs sued
to recover damages. Held, a non-breaching party is entitled damages arising naturally from
the breach itself or those that are in the reasonable contemplation of the parties at the time
of contracting. Here, while the breach by Defendants was the actual cause of the lost profits of
Plaintiffs, it cannot be said that under ordinary circumstances such loss arises naturally from this
type of breach. There is a multitude of reasons for a miller to send a crank shaft to a third party.
Defendants had no way of knowing that their breach would cause a longer shutdown of the mill,
resulting in lost profits. Further, Plaintiffs never communicated the special circumstances to
Defendants, nor did Defendants know of the special circumstances.

Damages are recoverable under two limbs under Hadley v Baxendale:

(i) Normal loss (loss that occurs in the usual course of things); or for

(ii) Abnormal loss (loss that arises because of a special or exceptional circumstance.

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The Court of Appeal took the opportunity to review and restate the principles governing the measure
of damages in:

Victoria Laundry v Newman Industries – Newman Industries Ltd was meant to deliver a boiler for
Victoria Laundry (Windsor) Ltd. The delivery was five months late. As a result of not having enough
laundry capacity, Victoria Laundry lost a lucrative cleaning contract from the Ministry of Supply.
Victoria Laundry sued for the ordinary profit that it had forgone through not having the boiler on time.
The question was whether it could also claim the extraordinary profit it would have made, had it been
able to take advantage of the lucrative Ministry of Supply contract. Asquith LJ in the Court of Appeal
held that Newman Industries only had to compensate for the ordinary, not the extraordinary loss of
profits. He distinguished losses from “particularly lucrative dyeing contracts” as a different type of
loss which would only be recoverable if the defendant had sufficient knowledge of them to make it
reasonable to attribute to him acceptance of liability for such losses. The vendor of the boilers would
have regarded the profits on these contracts as a different and higher form of risk than the general
risk of loss of profits by the laundry.

Heron II - Koufos chartered a ship (the Heron II) from Czarnikow to bring 3,000 tons of sugar to
Basra. It was nine days late. The sugar price had dropped from £32 10s to £31 2s 9d. Koufos claimed
the difference in the loss of profit. Czarkinow knew there was a sugar market, but not that Koufos
intended to sell it straight away. The House of Lords held that the loss was not too remote. They
stated that the test for remoteness in contract is narrower than it is in tort. While in tort any damage
of a type which is reasonably foreseeable can be claimed, Lord Reid ruled that, in contract, the
defendant must ought to have realised that the loss was 'not unlikely to result from the breach of
contract'. A higher degree of probability is needed for the loss to be in the contemplation of the
parties. Lord Reid disapproved of Asquith LJ’s judgment in Victoria Laundry v Newman in that the
term "foreseeability" was employed. He emphasised that he would ‘use the words ‘not unlikely’ as
denoting a degree of probability considerably less than an even chance but nevertheless not very
unusual and easily foreseeable. He emphasised that the tests in tort and contract were very different,
on the basis that where there is a contract the parties will have had the opportunity to apportion their
liabilities already. Therefore, the test for remoteness should be more generous than in tort, where
consequential losses must be very remote to preclude compensation.

Mitigation of loss: it is the duty of every plaintiff to mitigate his loss, that is, to do his best not to
increase the amount of damage done. There are three rules:-

(i) The plaintiff cannot recover for loss which the plaintiff could have avoided by taking
reasonable steps;
(ii) The plaintiff cannot recover for any loss he has actually avoided, even though he took more
steps than were necessary in compliance with the rule above; and
(iii) The plaintiff may recover loss incurred in taking reasonable steps to mitigate his loss, even
though he did not succeed.

Calculation of damages:-

a) Actual Damages

Where damages are based on the difference in value principle, then market values may be taken into
account to assess the plaintiff’s loss.

Sale of Goods Ordinance Section 50(1) Where the seller wrongfully, neglects or refuses to deliver the
goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery.

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Sale of Goods Ordinance Section 49(1) Where the buyer wrongfully neglects or refuses to accept and
pay for the goods, the seller may maintain an action against him for damages for non-acceptance.

b) Liquidated Damages and Penalty Clauses

The parties to a contract may make a genuine assessment of the losses which are likely to result in the
event of a breach and stipulate that such sum shall be payable in the event of a breach. Such clauses are
known as liquidated damages clauses and will be effective in the event of a breach and the plaintiff will not
recover more than that sum.

If however the clause is not an assessment of losses but is intended as punishment on the contract-breaker,
then the clause is a penalty clause and is void. In an action for breach of contract it is disregarded.

7. INTENTION TO CREATE LEGAL RELATIONS

The parties must intend the agreement to be legally binding. The nearest courts can get to discover this
intention is to apply an objective test and judge the situation by what was said and done. The law divides
agreements into the following:-

(i) Social and Domestic Agreements

The law presumes that social agreements are not intended to be legally binding. However, if it can be
shown that the transaction had the opposite intention, the court may be prepared to rebut the
presumption and to find the necessary intention for a contract.

Balfour v Balfour – Husband promised to pay £30 monthly while he was abroad on work but when the
couple drifted apart, the wife argued that there was an enforceable agreement. It held that there is a
rebuttable presumption against an intention to create a legally enforceable agreement when the
agreement is domestic in nature and that the wife did not rebut the same.

Merritt v Merritt – While under the principles laid out in Balfour v Balfour, domestic agreements between
spouses are rarely legally enforceable, and this principle was rebutted where two spouses who formed
an agreement over their matrimonial home were not on good terms.

Jones v Padavatton – demonstrates how domestic agreements, such as in between a mother and
daughter, are presumed not to be legally binding unless there is clear intention.

Parker v Clarke – If social agreements have serious consequences for the parties, it may rebut the
presumption of no intention to create legal relations in social agreements: Devlin J held that the Clarks
were liable for damages to the Parkers given that the Parkers had relied to their detriment on the
assurance of the Clarks that they would have a place to stay.

In Simpkins v Pays an informal agreement between a grandmother, granddaughter and a lodger to

share competition winnings was binding. Sellers J held, applying the objective test, that the facts showed
a "mutuality" between the parties, adding: "If my conclusion that there was an arrangement to share any
prize money is not correct, the alternative position to that of these three persons competing together as
a “syndicate", as counsel for the plaintiff put it, would mean that the plaintiff, despite her propensity for
having a gamble, suddenly abandoned all her interest in the competition in the Sunday Empire News. I
think that that is most improbable …"

(ii) Business/Commercial Agreements

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In business agreements the presumption is that the parties intend to create legal relations and make a
contract. This presumption can be rebutted by the inclusion of an express statement to that effect in the
agreement – Rose and Frank Co. v Crompton Bros. Ltd.

Jones v Vernon Pools - "Honour Clauses" in "Gentlemen’s' Agreement" will be recognised as negating
intention to create legal relations, as where the clause, "this agreement is binding in honour only" was
effective.

8. OBJECTIVE AND SUBJECTIVE TEST

Intention to create legal relations is defined as an intention to enter a legally binding agreement or contract.
Intention to create legal relations is one of the necessary elements in formation of a contract. It is because,
intention to create legal relations consists of readiness of a party to accept the legal consequences of having
entered into an agreement.
When two parties decided to enter in the environment of a contract, their mind will understand the contents
of the contracts. This is due to their ‘intention’ to be consenting mind which both of the parties have to agree.
If there is no agreement by both of the parties, it may make the contact being a void agreement.

According to contract law, a contract is only legally enforceable if the parties show an intention to be legally
bound.

In addition, a party must express his or her intention through unambiguous words or actions. The other party
should understand the words or actions as the former party had intended for him or her to. However, this is
not always the case. Sometimes, there may be miscommunication resulting from certain factors.

To determine whether parties to a contract have the intention to start a legal relationship, the court uses the
test of contractual intent. Such a test is objective and not subjective in nature. It uses an objective approach
to validate the contract's enforceability. This has been criticized by some scholars as being a very narrow
approach to contract formation.

The court disregards a party's subjective intent, which is his or her actual state of mind, and focuses more
on objective intent, which is the intention of a rational person under the same circumstances. It does not
interfere in a person's personal mental sphere but looks at the situation from a reasonable person's point of
view.

OBJECTIVE APPROACH:

The objective approach states that contractual communications, whether oral or written, are generally to be
understood in the way that a reasonable person in the situation or position of the recipient with the
background knowledge would have understood them.

Fundamentally, a contract is a legally binding “meeting of the minds” (consensus ad idem) between the
parties. It is not the unexpressed intention in the minds of the parties that determines whether there was “a
meeting.” The objective approach seeks how a reasonable person would interpret the interaction. To ensure
the meeting of the minds, the objective approach looks at the plain meanings and behavior to be understood.
It does not find out what the parties intended to say but rather what the parties actually said.

SUBJECTIVE APPROACH:

On the contrary, the subjective approach refers to a legal doctrine that regards a contract formed on the
basis of a subjective meeting of minds as legally binding. It requires the court to consider a contracting

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party's state of mind when determining whether a contract is legally enforceable whereas if an objective
approach is used, the court will look at the case from the point of view of a rational person.

The subjective approach seeks what the parties intended in their minds. When using this approach, the
court will look at the subjective expectations and anticipations of the parties and ignore the contract's
objective language. However, some courts and commentators have rejected this theory, preferring the
objective approach instead.

The subsequent risk when applying the subjective approach include parties simply evading off the contract
saying they had other intentions in their minds which also gives way for the parties to provide false evidence
that their intentions were different.

It should be noted that two leading cases are presented that consider the scope of the objective test, namely
Smith v. Hughes and Centrovincial Estates PLC v. Merchant Investors Assurance Company Ltd.

In Smith V Hughes, Blackburn J set out his classic statement of the objective interpretation of people's
conduct when entering into a contract. He stated that "If, whatever a man's real intention may be, he so
conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the
other party, and that other party upon that belief enters into the contract with him, the man thus conducting
himself would be equally bound as if he had intended to agree to the other party's terms."

Even though the subjective intentions of the parties differed, (that Mr. Hughes wanted to purchase old oats
and that Mr. Smith wanted to sell new oats) from a reasonable man’s point of view, it was evident that Mr.
Hughes’ behavior was that he was accepting the terms of Mr. Smith’s offer.

It was held that the question was not merely whether the parties were at consensus ad idem, but what they
had communicated by their conduct and words to one another. Mr. Smith was held to be under no duty to
inform Mr. Hughes of his possible mistake about the kind of oats, reaffirming the old idea of caveat emptor
(buyer beware)

It was also concluded that there was a contract between Mr Smith and Mr Hughes and that it would not be
avoided. There had been no discussion between the parties regarding the delivery of old oats. An objective
test revealed that a reasonable person would expect the sale of good quality oats in a similar contract, since
there was no express discussion of old oats. The sample gave him the chance to inspect the oats and this
was an example of caveat emptor (buyer beware).

Therefore, it can be stated that the objective test remains relevant in ascertaining whether a contract is
formed between parties.

9. ILLEGALITY
Contracts illegal;
 By Statutes
 At Common Law
 Due to Public Policy and morality

CONTRACTS ILLEGAL BY STATUTE

Statutory prohibitions could be express or implied. They may declare certain contracts null and void or
prohibit making of a contract in a manner other than specified under the pain of invalidity.

Mahmoud & Isphani (1921) 2 KB 731

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Hull Blyth & Co v. Valliappa Chettiar 39 NLR 97 - The Court has to deal with the question whether a
statue imposes express prohibition or imposes a penalty for entering in to a class of contract. In the latter
case, the precise terms of the statute which imposes the penalty should be carefully examined.

It is found that, statutes impose penalty yet does not prohibit the contract if it is made with a party innocent
of the offence created by the statute.

A contract is not invalid for illegality merely because it is contrary to the policy of an ordinance. It is so, if it
contravenes with some specific provision of law.

Eg - The Excise Ordinance stipulates that liquor cannot be sold without a valid licence. This does not
invalidate the contract if a buyer claims action against selling adulterated liquor to him by an un-licenced
seller.

A contract made otherwise than in the manner indicated by the statute would fall within the category of
prohibited contracts thereby void.

Fernando v. Ranmanathan 16 NLR 337 - if the intention of the legislature is to merely discourage a
contract by levying a charge, it presumably does not make the contract illegal. On the other hand, if the
intention is to protect the general public by requiring compliance with certain terms or conditions, that
indicates illegality. The question whether a particular transaction falls within the meaning of prohibitory
statute should be evaluated case by case, based on the language of relevant act in its own footing.

Kandasamy v. Kandaiah 57 NLR 115

PROHIBITED CONTRACTS AT COMMON LAW

I. Transaction in things extra-commercium (no commercial value) - Seashores, rivers, streams, state
land cannot be sold thus, extra-commercium. Opium, drugs, firearms cannot be sold without a
license thus are ‘relatively extra-commercium’.

II. Contracts entered in to with fraudulent intention – A fraudulent deal is valid until cancelled at RDL.
Such cancellation reverts to the date of the deal. E.g.: Paulian Action*.
*Paulian Action – an action given to creditors to obtain the revocation of activities done by their debtor in
fraud of their rights. The action is based on the fiction that no alienation of the property had in fact taken
place.

ILLEGAL DUE TO PUBLIC POLICY

Kiran Atapattu v. Janashakthi Insurance Co

Light Weight Body Armour Ltd v. SL Army - Public policy is a restitution cause which once gotten in, no
knowing where it will lead to.

In Richardson v. Mellish (1824) 2 BING 229 at 252, Burroughs J stated: Although social concepts are ever
changing, at any given point in time, there would be definite types of contractual clauses which law would
condemn on grounds of public policy.

Contracts in Conflict with Public Policy:

1. Agreements in conflict with the interests of state in relation to;

a. National security
b. Public service
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c. Administration of justice

2. Agreements conflicting with morality.

3. Agreements restraining individual freedom.

a. In Relation to National Security –

when two countries are at war, all legal relations between their subjects will seize and under the Common
Law, any trading with the enemy alien becomes hipo facto illegal.

b. Public Service –
in the national interest, members of public service should be free of corruption. The Bribery Act has made
offering of such gratification to a public officer a punishable offence.

c. Administration of Justice –
I. All bargains to stifle criminal prosecution (by supressing investigations, deterring citizens from their
public duty of assisting the detection and punishment of crime) are void and against public policy.

Fernando v. Piyadasa 61 NLR 566

II. Agreement to give or supress evidence of another in a pending law suit is illegal and is no valid
consideration for a contract.

III. Agreement to commit or even abstain from a crime or delict is void.

IV. Maintenance and Champerty – Maintenance is intermeddling with a pending civil action by an un-
connected third party by assisting the plaintiff or defendant. Champerty is a form of maintenance to
gain from the outcome of the pending civil action.

V. Intermeddling with suitors – interference with the litigant’s right to retain the lawyer of his choice by
promoting any other lawyer for a fee is a punishable offence under the Intermeddling with Suitors
Ordinance.

VI. Agreements to oust the jurisdiction of Courts – illegal and void, being contrary to the public policy.

Exceptions exist with alternative dispute resolution methods such as Arbitration. Also, if an agreement only
requires certain conditions precedent to be compiled with for right of action, it is not considered illegal. E.g.:
making an arbitration award a condition precedent to right of action (Section 5 of the Arbitration Act)

Vijiya Narayan v. Gen. Insurance Co 47 NLR 289 - Agreements that Conflict With Morality:

Agreements relating to;

 Mess up or restrain marriages.
 Voluntary separation of husband wife.
 Marriage brokerage.
 Maintenance.
 Future succession.
 Usury.
 Wagering based on chance or uncertainty.

Swaminadan Chetti v. Douglas 32 NLR 293

 Restraint of individual freedom.

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Finlays Rentokil [Link] (1995) 2 SLR 346 - Facts:- A former Pest Control Supervisor having
left the services of the Petitioner, engaged in the same business for purposes contrary to clause 15(h) of
the Letter of Appointment.
Held:- “...an injunction will not be allowed against an employee if it would force the employee working for
the former employer or starve”.

10. CAPACITY OF PARTIES TO CONTRACT

The law protects persons labouring under certain specified disabilities by denying full contractual capacity
to such persons. The chief categories of contractual disability are:

 Minority
 Lunacy, drunkenness and prodigality
 Marriage
 Insolvency

Contracts entered into by persons labouring under a contractual disability may be voidable at the instance
of such party.

MINORITY

The Age of Minority Ordinance provides that a minor is any person less than 21 years. A minor must have
either a natural guardian or a guardian appointed by court.

There are two types of minors’ contracts:-

(1) Assisted Contracts

Contracts entered into by a minor with the assistance of a guardian or contracts entered into by a
guardian for and on behalf of a minor would constitute an assisted contract. Such contracts are usually
valid and binding on the minor. However, a minor can exercise the right to claim restitutio in integrum
where the minor has been prejudiced.

In addition to the consent of a guardian, the permission of court is required in order to enter into a
contract pertaining to immovable property of a minor.
- Weeramantry
- Kithsiri Perera v Dayasiri Perera

(2) Unassisted Contracts

The terms “void” and “voidable” are inadequate to explain the legal position of a minor’s unassisted
contracts.

A minor’s contract is neither void nor voidable in the sense in which those two terms are understood in
English law

The meaning of “voidable” as it applies to minors’ unassisted contracts in the Roman Dutch law is that
such a contract does not bind a minor unless he ratifies it on attaining majority but binds the other party
to the contract. Voet describes this as a “limping contract”.

Professor Nadarajah suggests the use of the expression “prima facie void as against the minor” instead
of voidable in describing a minor’s unassisted contract because a minor’s contract is different from a

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voidable contract in that the latter is valid until set aside whereas the former is presumed void until
ratified.

(a) Repudiation of Unassisted Contracts

It follows that a minor could repudiate an unassisted contract without the assistance of a court of law.
However a claim for restitutio in integrum may be instituted as matter of caution. Prescription Ordinance
provides that when a minor decides to seek the assistance of a court of law in order to repudiate a
contract he must do so within 3 years of attaining majority. Prescription Ordinance also provides that
repudiation need not be expressly done; repudiation is implied if the minor’s acts unequivocally show
that he wishes to repudiate the contract.

(b) Ratification of Unassisted Contracts

By Minor: Roman Dutch law relating to ratification is in force in Sri Lanka. Upon ratification after attaining
majority, a contract becomes binding on him as if it had been executed after his majority and effective
from the time the contract was made. Ratification may be express or implied. In order for ratification to
validly take place he must have full knowledge of the facts upon which contractual liability arises.

By Guardian: Where guardian ratifies during minority, ratification relates back to the date of the contract
thereby becoming equated to a contract made with his assistance. This does not take away the minor’s
right to restitutio in integrum. The court as the upper guardian also has the power to ratify a minor’s
unassisted contract.

(c) Beneficial Contracts of Minors

Different rules of law apply to contracts which are considered “beneficial” to minors. Contracts are
considered “beneficial” to a minor not only if the minor gets the best of the bargain but also if the contract
was for the minor’s benefit considering his position in life and other circumstances of the case (Nel v
Divine, Hall & Co.). Such contracts may be entered into without the assistance of the guardian and
binds the minor to the extent to which he has benefitted from the contract. A minor will not be held to
future performance under a contract even though beneficial.

(d) Contracts for Necessities

Section 3 of the Sale of Goods Ordinance provides that capacity to buy and sell is regulated by the
general law concerning capacity to contract, and to transfer and acquire property : Provided that where
necessaries are sold and delivered to a minor, or to a person who by reason of mental incapacity or
drunkenness is incompetent to contract, he must pay a reasonable price therefor. “Necessaries” in this
section means goods suitable to the condition in life of such minor or other person, and to his actual
requirements at the time of the sale and delivery.

“Necessities” according to Roman Dutch law comprise of:-

(i) All such things absolutely necessary for the existence and support of the minor such as food,
clothing and medicine;
(ii) Such things as are of use to the minor according to the station of his life;
(iii) Things conducive to the future mental and moral good of the minor such as an educational
course
(iv) Services for the preservation of the liberty and rights of the minor such as cost of litigation
for defending his legal rights

Misrepresentation regarding age would render the contract binding on the minor – Voet “fraud supplies
the want of age”. However, Weeramantry argues that every such misrepresentation should not be
treated as fraud in a country where many persons are ignorant of their precise age.
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Donatio Moris Causa: A minor who has testamentary capacity can also donate mortis cuasa without the
authority of his curator, although he may be incapable of making a donatio inter vivos (because it is
presumed to be a detriment to him). However, in Sri Lanka, Section 3 of the Wills Ordinance provides
that “no will made by any person under the age of eighteen years, shall be valid, unless such person
shall have obtained letters of venia aetatis or unless such person shall have been lawfully married”.

LUNACY, DRUNKENESS AND PRODIGALITY

Lunacy

Under Roman Dutch law a contract made by an insane person is void even if the other party to the contract
was not aware of the insanity of the person with whom he made the contract (Soysa v Soysa)

However is necessaries are provided to a person of unsound mind an implied obligation arises to pay for
them a reasonable price

A contract made during a lucid interval is valid – the English law doe not regard a person found insane by
inquisition as capable of entering into a valid contract even during a lucid interval, so long as the inquisition
continues in force; Conversely, under the Roman Dutch law an adjudicated insane person’s contracts made
during a lucid interval are valid if the presumption of insanity raised by the adjudication is rebutted by
evidence of restoration to reason.

Drunkenness

According to Roman Dutch law drunkenness renders a contract voidable. It is sufficient if the person in
question was so intoxicated as to be unable to realise the seriousness of his actions. Also see Section 3 of
the Sale of Goods Ordinance with regard to an obligation to pay a reasonable price for necessities.

In English law the contract of a drunken person is voidable if he is not capable of understanding the terms
of the contract and to set aside the contract he must prove that the counterparty knew of his drunkenness.

Prodigality

A prodigal is a person who squanders his assets to the prejudice of his dependents or wastes his fortune in
a reckless manner. The Roman Dutch law makes provision for a person to be declared prodigal and a
curator would then be appointed and the prodigal could only enter into a contract without the authority of his
curator unless the contract was solely advantageous to him. The contract of a spendthrift or a prodigal is
voidable if made after a declaration of prodigality.

The English law does not afford special contractual position to prodigals.

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