2. Wagering contracts.—Wagering contracts, tho they were at one time enforceable under the common law, are now by statute illegal. A wagering contract is one by which one party agrees to pay another money or property upon the happening of some un certain event. There is no right of action for the re covery of a bet claimed under a gaming contract, and if the losing party has paid over the money he cannot get it back, unless he proves that there has been fraud. The law thus endeavors to discharge gambling. Buying stock on margin has been held not to be a gambling contract, tho betting in a bucketshop is.. In a bucketshop transaction the broker does not buy the stock; he merely makes a bet for his client that the stock will rise or fall, and it is a gaming contract. But a broker who buys and sells shares for a client, altho on margin, actually buys the stock. The con tract is not a gaming contract, altho the broker may know that his client is not investing, but is merely speculating, and that the client has really insufficient means and should be saving rather than risking his money.
A contract of insurance, altho it is in the nature of a wagering contract, is enforceable; so also are con tracts for the sale and delivery of commodities at different prices. The actual intention of the parties will decide whether or not the contract is a gaming contract and, therefore, illegal. Thus if goods are bought subject to delivery at a future date at a fixed price, but it is agreed that the goods shall not be de livered or the price paid, with the understanding that when the time for purchase arrives, the intention is merely to make a settlement by one party paying the difference between the market price and the contract price, such a contract is a gaming contract and illegal. A note given in payment of such a settlement would be void.
3. Usurious contracts.--By statute the legal rate of interest in Canada is fixed at five per cent, where the agreement does not fix the rate. The maximum rate is also fixed by statute, and any excess over thiS max imum is usury. The Bank Act provides that a bank may stipulate for any rate of interest or discount not exceeding seven per cent per annum, and may re ceive and take any advance in such rate, but no higher rate of interest shall be recoverable by a bank. By the Money Lenders Act, any lender who shall stipu late for, allow or exact on any negotiable instrument, contract or agreement concerning a loan of less than five hundred dollars, a rate of interest greater than 12 per cent per annum, is liable to one year's im prisonment, or a penalty of one thousand dollars. If
a judgment has intervened, the rate is reduced to five per cent. A bona fide holder, before the maturity of a negotiable instrument discounted by a preceding holder at more than 12 per cent, may recover the amount thereof, but the party paying may reclaim the excess from the money lender.
4. Contracts in restraint of general principle is that contracts which unreasonably restrain trade are void. It is contrary to public policy for a man to contract not to engage in business at all.
There may be circumstances, however, which make it reasonable that a man should undertake not to en gage in a particular buginess for a certain length of time. Thus if a man sells a business and be under takes not to carry on any business which will compete with that which he has sold, he may obtain a better price, and such a contract, if not otherwise unreason able, will be maintained. Even then, however, the restraint must not be wider than is reasonably neces sary. A restraint of this kind may be more reason able now, with our modern means of transportation, than would have been the case fifty years ago. Such a restraint is not necessarily unreasonable because it is unlimited as to space. Thus in a leading case in England,' Mr. Nordenfelt, who was a manufacturer of guns and explosives, and who supplied them to the various governments of Europe, sold his business to Maxim Nordenfelt & Company, Limited, and under took not to compete with the business for twenty-five years. There was no restriction as to space. The sale was made in England, and later Mr. Nordenfelt began business again in Belgium. The House of Lords held that the restraint in this case was not un reasonable, and that he was bound by his contract.
So also in another case recently decided by the House of Lords, where a man was employed to sell clothing on the instalment plan, and he entered into a contract for three years, and bound himself that upon leaving his present employ he would not work for any competing firm or in the clothing trade for a year at any place within twenty-five miles of the em ployer's place of business, or within twenty-five miles of any place where it might do business, the contract was held unreasonable and void. Under the contract, it was pointed out, the employer might have dismissed the man at any time, and if the contract were good the employee would find himself unable to earn a livelihood by perhaps the only business he knew.