THE LAW OF CONTRACTS (PART 4) VALIDITY OF CONTRACTS MUTUALITY 1. The mutuality of obligation is the very essence of all contracts founded upon reciprocal promises.' "Hence it follows," says Pothier, "that nothing can be more contradictory to such an obligation than an entire liberty in either of the parties making the promise to perform it or not as he may please.""" The parties to a contract, therefore, must both be bound, and the one is not bound unless the other is also. If, therefore, the one party was never bound, on his part, to do the act which forms the consideration of the promise of the other, the agreement is void for want of mutuality. Without reciprocity of obligation there is no contract.* ILLUSTRATION. -A contract to employ a person to work "from time to time," the services to continue "only as long as satisfactory" to the employer, and which provided for a forfeit if the servant quitted his employment without specified notice, was held void for want of mutuality. "We think," said the court, "that the parties of the first part were not bound, under the terms of the contract, to employ the party of the second part for a single day or hour, and if they had absolutely refused to employ him he was without remedy in any court of the country. Here the contract imposes no obligation on one of the parties, and hence it is void for want of mutuality." 1 Add. Cont., p. 13; 10 Dist. Rep. (Pa.) 309 (1901). 2 Poth. Obl. Pt. 1, Art. 4. 31 Whart. Cont., p. 5. 46 Ore. 405 (1877). 5 157 Ill. 339 (1895). For notice of copyright, see page immediately following the title page So, too, a court of equity will not decree the specific performance of a contract which is lacking in mutuality. ILLUSTRATION. - This principle is aptly explained in the so-called reserve clause, contained in the contracts of many of the professional athletic clubs with their players, which has several times been before the courts. In one of the most recent of these cases a baseball club employed the player for six months under a contract which contained an option to renew for another period of six months, and for a similar period in two successive seasons, so that the player might be bound for four years at the option of the club, while the club might discharge the player on ten days' notice. It was held that this contract was wanting in mutuality and that an injunction to restrain the defendant from breaking his contract would be refused.' 2. We have already had occasion to consider the want of mutuality frequently apparent in optional unilateral contracts." The courts are not inclined to look with favor on a unilateral contract when the party who is free is attempting to enforce it against the party who is bound. Thus, an agreement between two persons, by which one without doing anything to further the common enterprise is to share equally in the profits, is without mutuality and void. Cases often arise where the agreement is to consist of a contract on the one hand to sell and on the other hand to purchase, in which it is apparently within the power of the purchaser to fix the quantity that he will receive under the contract. Some of the rules governing this class of contracts have already been considered in discussing options." It has been said that it is within legal competency for one to bind himself to furnish another with such supplies as may be needed during some certain period for some certain business or manufacture, or with such commodities as the purchaser has already bound himself to furnish another." Reasonable foresight in business requires that such contracts, though. more or less indefinite, should be upheld. Thus, a foundry 69 N. Y. Supp. 779 (1890); 8 Pa. Co. Ct. 57 (1890). 710 Dist. Rep. (Pa.) 309 (1901). 8 28 N. J. Eq. 589 (1877); see subtitle Options supra. 94 Nev. 504 (1868). 1034 U. S. App. 60 (1895). 12 105 Fed. Rep. 869 (1901); 110 III. 427 may purchase all the coal needed for a season, or a hotel its necessary supply of ice." In all these cases, contracts looking toward the future and embodying a subject-matter necessarily indefinite in quantity have been upheld; but it will be observed that, although the quantity under contract is not measured by any certain standard, it is capable of an approximately accurate forecast. The capacity of the furnace, the needs of the railroad, or the requirements of the hotel are within certain limits ascertainable by the vendor. But an agreement by a wholesale dealer to supply a retailer during a certain stated time at stated prices so much of a commodity as the purchaser may require, which leaves it practically optional with the purchaser to give or refuse his orders with the rise and fall of prices, in effect binding the seller alone, and leaving the buyer in a situation to go on or discontinue purchasing as his interests develop, is unilateral and void for want of mutuality." REALITY OF CONSENT 3. Where there is an agreement between competent parties, the reality or genuineness of their consent may be affected by the circumstances of the transaction. Their apparent consent may be induced by ignorance as to a material fact of the agreement; or the freedom of consent may be affected by fear or by the consenting party being. under the power of the influence of the other." Concerning reality or genuineness of consent, the inquiry recurs in various forms. All the other elements of a contract being valid ones, the question is: "Was the consent of both or either of the parties given under such circumstances as to make it no real expression of intention?" And the question may have to be answered in the affirmative where there is mistake, fraud or misrepresentation, duress, or undue influence, sufficiently operative to affect the contract." 13 20 La. Ann. 220 (1868). 14 105 Fed. Rep. 869 (1901). 15 Poll. Cont. (6th Ed.), p. 421. MISTAKE 4. Mistake is occasioned by ignorance or misconception of some matter under the influence of which an act is done; so that the intention and legal consequence presumptively attributable to the act are rebutted or modified by evidence of the mistake." The validity of contract is not affected by mistake of itself. But mistake may be such as to prevent any real agreement being formed, in which case the agreement is void; or mistake may occur in the expression of a real agreement, in which case, subject to rules of evidence, the mistake can be rectified." Mistake may be of law or in fact. 5. Mistake in Fact. - Where an act is done under a mistake, the mistake does not either add anything to or take away anything from the legal consequences of that act either as regards any right of other persons or any liability of the person doing it, nor does it produce any special consequence of its own, unless knowledge of something which the mistake prevents from being known, or an intention necessarily depending on such knowledge, be from the nature of the particular act a condition precedent to the arising of some right or duty under it.1o 19 It may happen that each party meant something perhaps perfectly well understood, but not the same thing as the other meant. Here their minds have never met and, although the contract may appear a complete agreement, it is not a contract at all. In the leading case on this point, the plaintiff, an illiterate man, executed a deed which he was informed was a release for rent, when it was in fact a general release of all claims. It was held not the plaintiff's deed." 6. Where it is material to the transaction to know who the other contracting party is and an error is made as to the person of the other party, there is no contract. For example, 17 Leake Cont., p. 262. 18 Poll. Cont. pp. 422, 423. 19 Poll. Cont., p. 394. if a man contract to purchase iron ore from a certain party, and a third person, without the knowledge or consent of the purchaser, deliver to him ore in fulfilment of the contract, there is no contractual relation with the third party." 7. A contract entered into under a mutual mistake as to the subject-matter of the contract, which induces the contract, is inoperative. Such an error of fact takes place where some fact is supposed to exist which does not exist. Thus, where the owner of property leased to a manufacturer a waterpower which both understood could be used for the manufacturing of pulp, and it turned out that the power could not be used for such a purpose, it was held that an error of fact had occurred which rendered the lease inoperative." 8. If the parties in stating the terms of their agreement have made a mistake clearly apparent on the face of the instrument, and which admits of no other construction, it may be corrected either by a court of law or equity. The general rule is that the mistake to be relieved against must be mutual." A court of equity has no power to alter or reform an agreement made between parties, since this would be, in truth, a power to contract for them, but merely to correct the writing executed as evidence of the agreement so as to make it express what the parties actually agreed to. It follows, that the mistake which it may correct in such a writing must be, as usually expressed, the mistake of both parties to it;" that is, such a mistake in the drafting of the writing as makes it convey the intent or meaning of neither party to the contract." If a court were to alter an instrument so as to make it accord with the understanding of one party when it already expressed the agreement as understood by the other, it would be just as far from expressing the mutual intent of the parties as before." 212 H. & N. (Eng.) 564 (1857). 22 65 Vt. 406 (1893); L. R. 2 Q. B. (Eng.) 580 (1867). 235 H. L. Cas. (Eng.) 40 (1854). 245 R. I. 130 (1858). |