Story Case

Jen & Company, dealers in school books, was negotiating for its season's supply of books when the Plymouth Press wrote it the following letter:

"January 1,1915. We offer to furnish you for the season of January, February, and March all the books you may want of our manufacture for fifty cents a book, in return for your promise to pay cash.

(Signed) The Plymouth Press".

Jen & Company answered:

"We hereby accept the offer made by The Plymouth Press on January 1, for the season of January, February and March.

(Signed) Jen & Company".

On February 10, 1915, The Plymouth Press wrote to Jen & Company notifying them that the price of books was sixty cents per copy wholesale for future delivery. Thereupon, Jen & Company ordered two hundred books, demanding that the Plymouth Press sell them under the price of fifty cents per copy as per contract. The Plymouth Press contended that no contract existed, since there was a lack of a promise from Jen & Company to buy any books; that therefore, only an offer existed from the Plymouth Press which it could withdraw at any time before acceptance. Is this a good defense?

Ruling Court Case. Muscatine Water Company Vs. Muscatine Lumber Company, Volume 85 Iowa Reports, Page 112; Volume 39 American State Reports, Page 284

The Muscatine Lumber Company owned and operated a saw mill on the outer limits of the city of Muscatine. They were so located that they were without fire protection. Negotiations were had with the Muscatine Water Company by which the latter extended its mains to the plant of the lumber company upon its promise to pay the sum of $250 annually for ten years from that date. The lumber company agreed to this condition and the main was extended. In pursuance of the terms of their agreement, the lumber company paid the sum stipulated for a period of four years, when its mill and other buildings were destroyed by fire. It did not rebuild, and accordingly, refused to continue to pay the annual sum agreed upon. The water company thereupon brought this action to recover it.

It was contended by the lumber company that there was no contract, for they had never accepted the offer of the water company.

Decision

There was a binding contract between the parties to the agreement. The promise of the lumber company to pay a certain annual sum constituted an acceptance of the offer by the water company to extend the main. Each party promised to do a particular act and this resulted in a binding contract between the two parties.

Therefore, judgment was given for the water company in this action.

Ruling Law. Story Case Answer

A person may make an offer which contemplates acceptance by a promise. When such an offer is made, and the person to whom it is made gives the promise, this constitutes an acceptance, and completes the contract.

This is true, provided the offer is made in such a manner that the acceptance by a promise is definite and certain, obligating the acceptor to do something in the future. This is determined by the test of mutuality; we ask, can the offeror under the alleged contract hold the acceptor to account in a law suit? If he cannot, a contract does not exist. In the Story Case, had the Plymouth Press attempted to hold Jen & Company to the original contract or apparent contract, the Court would have said: No contract exists, because Jen & Company merely promised to buy all the books it might want; it was under no obligation by its promise to buy any books at all. Therefore, since there was a lack of mutuality of promises, Jen & Company cannot hold the Plymouth Press to the order for two hundred books. The defense of the Plymouth Press is effective.