1911 Encyclopædia Britannica/Bond
BOND,[1] in English law, an obligation by deed. Its design is to secure that the obligor, i.e. the person giving the bond, will either pay a sum of money, or do or refrain from doing some act; and for this purpose the obligor binds himself in a penalty to the obligee, with a condition added that, if the obligor pays the sum secured—which is usually half the penalty—or does or refrains from doing the specified act, the bond shall be void: otherwise it shall remain in full force. This condition is known as the defeasance because it defeats or undoes the bond. The form of a common money bond runs as follows:—
Know All Men by these presents that I, A. B. (name, address and description of obligor), am bound to C. D. (name, address and description of obligee) in the sum of £[2000] to be paid to the said (obligee), his executors, administrators or assigns or to his or their attorney or attorneys, for which payment I bind myself by these presents. Sealed with my seal. Dated this day of 19 .
The condition of the above-written bond is such that if the above
A. B., his heirs, executors or administrators, shall on the
day of pay to the above-named C. D., his heirs, executors,
administrators or assigns the sum of £[1000], with interest for the
same from the date of the above-written bond at the rate of
per cent per annum without any deduction, then the above-written
bond shall be void: otherwise the bond shall remain in full force.
Signed, sealed and delivered
by the above-named A. B.
in the presence of (witness)
Recitals are frequently added to explain the circumstances under which the bond is given.
If the condition is not performed, i.e. if the obligor does not pay the money by the day stipulated, or do or refrain from doing the act provided for, the bond becomes forfeit or absolute at law, and charges the obligor and his estate (see Conveyancing Act 1881, s. 59). In old days, when a bond was forfeit, the whole penalty was recoverable at law and payment post diem could not be pleaded to an action on it, but the court of chancery early interposed to prevent oppression. It held the penalty of a bond to be the form, not the substance of it, a pledge merely to secure repayment of the sum bona fide advanced, and would not permit a man to take more than in conscience he ought, i.e. in case of a common money bond, his principal, interest and expenses. This equitable relief received statutory recognition by an act of 1705, which provided that, in case of a common money bond, payment of the lesser sum with interest and costs shall be taken in full satisfaction of the bond. An obligee of a common money bond can, since the date of the Judicature Act, obtain summary judgment under O. xiv. (R.S.C. 1883) by specially endorsing his writ under O. iii. R. 6.
Bonds were, however, and still are given to secure performance of a variety of matters other than the payment of a sum of money at a fixed date. They may be given and are given, for instance, to guarantee the fidelity of a clerk, of a rent collector, or of a person in an office of public trust, or to secure that an intended husband will settle a sum on his wife in the event of her surviving him, or that a building contract shall be carried out, or that a rival business shall not be carried on by the obligor except within certain limits of time and space. The same object can often be attained—and more conveniently attained—by a covenant than by bond, and covenants have in the practice of conveyancers largely superseded bonds, but there are cases where security by bond is still preferable to security by covenant. Thus under a bond to secure an annuity, if the obligor makes default, judgment may be entered for the penalty and stand as security for the future payments without the necessity of bringing a fresh action for each payment. In cases of bonds with special conditions, such as those instanced above, the remedy of the obligee for breach of the condition is prescribed by an act of 1696, the procedure under which is preserved by the Judicature Act (O. xxii. R. 1, O. xiii. R. 14). The obligee assigns the particular breaches of which he complains, damages in respect of such breaches are assessed, and, on payment into court by the obligor of the amount of such damages, the court enters a stay of execution. A difficulty which has much exercised and still exercises the courts is to determine, in these cases of special conditions, whether the sum for which the bond is given is a true penalty or only liquidated damages. There is nothing to prevent the parties to a bond from agreeing the damages for a breach, and if they have done so, the court will not interfere, as it will in the case of a penalty. The leading case on the subject is Kemble v. Farren (1829; 6 Bing. 148).
Bonds given to secure the doing of anything which is contrary to the policy of the law are void. Such, for instance, is a bond given to a woman for future cohabitation (as distinguished from past cohabitation), or a marriage brocage bond, that is, a bond given to procure a marriage between parties. (See the matrimonial agency case, Hermann v. Charlesworth, 1905, 2 K.B. 123). It was not without design that Shakespeare laid the scene of Shylock’s suit on Antonio’s bond in a Venetian court; the bond would have had short shrift in an English court.
Post Obit Bonds.—A post obit bond is one given by an expectant heir or legatee, payable on or after the death of the person from whom the obligor has expectations. Such a bond, if the obligee has exacted unconscionable terms, may be set aside.
Bottomry Bonds.—A bottomry bond is a contract of hypothecation by which the owner of a ship, or the master as his agent, borrows money for the use of the ship to meet some emergency, e.g. necessary repairs, and pledges the ship (or keel or bottom of the ship, partem pro toto) as security for repayment. If the ship safely accomplishes her voyage, the obligee gets his money back with the agreed interest: if the ship is totally lost, he loses it altogether.
Lloyd’s Bonds.—Lloyd’s bonds are instruments under the seal of a railway company, admitting the indebtedness of the company to the obligee to a specified amount for work done or goods supplied, with a covenant to pay him such amount with interest on a future day. They are a device by which railway companies were enabled to increase their indebtedness without technically violating their charter. The name is derived from the counsel who settled the form of the bond.
Debenture Bonds.—Debenture bonds are bonds secured only by the covenant of the company without any floating or fixed charge on the assets. (See Debentures and Debenture Stock.)
Recognizance.—A recognizance differs from a bond in being entered into before a court of record and thereby becoming an obligation of record.
Heritable bond is a Scots law term, meaning a bond for money, joined with a conveyance of land, and held by a creditor as security for his debt.
For goods “in bond” see Bonded Warehouse. (E. Ma.)
- ↑ This word, meaning “that which binds,” is a phonetic variant of “band,” and is derived from the Teutonic root seen in bindan, to bind; it must be distinguished from the obsolete “bond,” meaning originally a householder. In the laws of Canute this word is used as equal to the Old English ceorl (see Churl), and thus, as the churl’s position became less free after the Norman Conquest, the “bond” approximated to the “villein,” and still later to the “serf.” The word is in Old English bonda, and appears in “husband” (q.v.), and is derived from the root of the verb búa, to dwell, to have a house, the Latin colere, and thus in origin is cognate with German Bauer and English “boor.” The transition in meaning to the idea of serfdom, and hence to slavery, is due to an early confusion with “bond,” from “bind.” The same wrong connexion appears in the transition of meaning in “bondage,” properly “tenure in villeinage,” but now used as synonymous with “slavery.” A trace of the early meaning still survives in “bondager” (q.v.).