Story Case

Welton, Baker & Company, wholesale coal dealers, wrote the following letter to The Cherry Red Brick Company:

"January 2, 1915. Gentlemen:

We offer yon steam lump coal at $3 per ton, if you agree to buy all the coal you may need from us for this year.

(Signed) Welton, Baker & Company".

On January 3, 1915, The Cherry Red Brick Company replied with the following letter: "Gentlemen:

We accept your offer of the 2nd to furnish us all the steam lump coal we may need for this year at $3 per ton.

(Signed) The Cheery Red Brick Company".

Several orders were filled in accordance with this understanding. On April 1, 1915, a national miners' strike was called and the market price of all coal increased. Welton, Baker & Company wrote The Cherry Red Brick Company the following letter: "Gentlemen:

Upon advice from our attorneys, we have elected to cancel our arrangement with you on the ground that a binding contract never existed between us. We made you an offer which remained merely a standing offer subject to our withdrawal at any time, since it was not supported by a promise from you, changing it into a binding contract. In other words, since you merely promised to buy all the coal you might need - and you might not need any - we could not hold you to buy any, and for that reason you cannot hold us now.

(Signed) Welton, BakeR & Company".

The Cherry Red Brick Company started suit upon the alleged contract. Is the defense of the coal company effective?

Ruling Court Case. Worthy Vs. Rice, Volume 8 Richardson Reports (South Carolina), Page 416

Rice was a cotton planter and had many slaves on his plantation. After his cotton was all picked by the slaves, he was desirous of hiring them out, so that they would earn revenue for him. Worthy was engaged in carrying cotton up and down the river in boats for planters. Just before all the produce was ready for market, Rice agreed with "Worthy to ship all his cotton with him, if he would promise to hire two slaves from the Rice plantation as boat hands. "Worthy, eager to get as much cotton to carry as possible, promised to engage the men. A few days later, Rice sold all his cotton, without acquainting "Worthy of his intention. "When the latter learned that Rice had no cotton remaining, he brought this action to recover damages for the breach of the contract.

It was insisted by Rice that he was not liable, because there was no consideration for his promise.

Decision

The promise of the parties in this case was mutual and simultaneous; each was the inducement for the other. An agreement, consisting of mutual promises, is legally binding, because the promise of each is a consideration for the promise of the other. Thus, Worthy is entitled to recover from Rice such damages as he suffered by the loss of the carrying privilege.

Therefore, judgment was for "Worthy, the plaintiff, in this action.

Ruling Law. Story Case Answer

Where two parties make mutual and simultaneous promises to each other, a bi-lateral relationship exists, so-called because each party is under obligation to the other to the extent of his promise. Here, the consideration does not consist of the doing of any act by either party, but consists in the promise of each.

In the Story Case, a good contract existed, consisting of the promises of both sides. Apparently, the reasoning of the coal company, upon which it bases the conclusion that a contract does not exist, is correct because, as stated, the brick company might not need any coal. Yet, it has agreed to buy all the coal it might need from the Welton, Baker Company, and therefore, has obligated itself not to buy any coal elsewhere. This is a sufficient promise to support a counter-promise and the contract is good.