WAR AND COMMERCE

King Country Chronicle, Volume VIII, Issue 698, 26 August 1914, Page 2

WAR AND COMMERCE

«—« $ AN INTERESTING SURVEY

HOW BUSINESS TRANSACTIONS ARE AFFECTED

Intercourse with thß enemy divided by the line of war is Btrictly prohibited during the continuance of hostilities, writes the commercial editor of the Sydney Morning Herald. This rule may, howevsr, De waived by the is9Ue of a special license from the Crown. Such licenses are only given in very exceptional circumstances. Aa to rights and liabilities that existed at the outreak of war these are, for the most part, suspended during the currency of hostilities. There c.re some exceptions to this rule, and in order to make the position perfectly clear it is well to consider the various cases in detail. This may be done by first taking the case of debts between snemies.of negotiable securities made or held by enemies, of contracts of affreightment entered into prior to the war and involving enemy vessels or voyages to enemy porta, contracts of insurance, contracts of agency, contractsof.partnership, and interests in companies and other corporations. These will be considered in turn

First, as to debts. These must have been in existence prior to the outbreak of hostilities, and must bs between enemies divided by the line of war. For instance, what we are about to eay would have no application to a debt existing between an Australian resident and a German subject domiciled, say, in France or in the United States. It would, however, have full force as regards one existing between an Australian and a German subject resident hi German New Guinea or Samoa. Such debts are suspended during the war, not only as regards the duty of th 3 debtor to pay, but alsa as regards the capacity of the credit or to sue. There is in effect a moratorium, whose duration is coincident with the duration of the war. If a debtor .lid. indeed, pay hia enemy ceditor within the war period that payment would be illegal if it involved the transmission of money to the enemy Not only is the debt suspended, but no interest accrues as a consequence while a state of war exists, for such interest is.regarded a3 the fruit of forbearance, and no such forbearance can exist while -war prevails. But interest that haa no such basis, as, for instance, the interest due on a mortgage, will run on as usual, though the payment thereof will be suspended, as also will the repayment of the principal sura itself. On the declaration of peace, all rights of creditors and liabilities cf debtors automatically revived. Debts incurred during the currency of the war are totally illegal, and so cannot be recovered after the war in any court of justice, unless these be incurred under special license as above mentioned

, As regards negotiable instruments, such, as cheques, promissory notes, bills of exchange, and certain debentures, similar though not precisely the same rules prevail* If drawn during the war in favour of an enemy subject, they are quite illegal, and the illegalityMs not overcome by the; fact of their being transferred to another British subject or to a neutral. If drawn prior to the outbreak of war, and if they are found in the hands of an enemy, they cannot be sued on during the war; but all rights revive on peace, with no additional interest added. If however, a negotiable instrument had been transferred to a neutral, there is nothing to prevent hia recovering its value in the ordinary way

As to co!itract3 of affreightment made prior to the outbreak of hostilities between divided by the line of war, these are rescinded if unfulfilled; but if partially fulfilled, then they are suspended during the currency ot the war. Even if such contracts are made between persons who are not enemies, but in circumstances involving • a voyage to an enemy port or involving the charterer in illegal intercourse with the enemy (Continued on page 7) )