Contracts Empolyment

A. There Must Be Two Parties

George "Williams was the San Francisco representative of Counselman and Bingham, bankers. When Counselman and Bingham placed an issue of California public service bonds on the market, Williams realized that the bonds were an excellent source of investment, and attempted to purchase three-fourths of the entire lot placed with him to sell.

He signed and mailed the following order blank to the New York office:

January 15, 1915.

This day, I George Williams, have purchased of Counselman and Bingham fifty Western Hydro Electric Bonds for which I agree to pay $5,500.

(Signed) George Williams, Accepted:

George Williams, Western Manager of Counselman and Bingham.

When Counselman and Bingham received this order, they appreciated more fully the value of the bonds and refused to deliver them; the banking firm contended, among other reasons, that no contract existed since there were not two parties to the agreement. Is this a good defense to a suit on contract brought by Williams?

Ruling Court Case. Burditt Vs. Colburn, Volume 62 Vermont Reports, Page 231; Volume 13 Lawyer's Reports Annotated, Page 676

Rollins Meacham, was administrator of the estate of Angeline Gorham. A large amount of money, in-trusted to him as administrator, he used for his own personal wants and needs, instead of administering it for the benefit of the estate, as was his duty.

In order to secure the estate for the amount of money he thus converted to his own use, he made a promissory note, payable to himself as administrator, and signed by himself personally. In like manner he executed a mortgage on his home to himself as administrator, signed by himself personally. The note and mortgage were kept by Rollins Meacham, and after his decease, they were found with the other papers belonging to the estate of Angeline Gorham, deceased.

After Meacham's death, Charles Colburn, the defendant in this action, was appointed his administrator. Burditt, the plaintiff herein, was appointed to continue the administration of the estate of Angeline. Colburn turned over to Burditt the note and mortgage in question. Then Burditt sued the defendant Colburn upon this note, and sought to have the mortgage foreclosed. It was contended by the defendant that neither the note nor the mortgage was a valid obligation because neither was made between two or more parties.

The mortgage and the note were invalid as obligations of the deceased person. They lack a fundamental element of a binding obligation - two or more contracting parties.

Mr. Justice Tyler said in part: "The mortgage must be held invalid for want of contracting parties. A contract necessarily implies a concurrence of intention in two parties, one of whom promises something to the other, who, on his part accepts such promise. One person cannot by his promise, confer a right against himself. Until the concurrence of two minds of two parties there is no contract.

So judgment was given for the defendant, Colburn.

An examination of the general nature of a contract and an attempt to discover the essential elements thereof at once reveals the fact that the most fundamental essential is the presence of two or more contracting parties. Although any other supposition, at first thought may seem absurd, yet often cases arise where one who is acting as agent, or trustee, or administrator, attempts to contract with himself individually. This cannot be done because the law requires that, on the one hand, there be a contracting party who receives a certain right by the contract and and, on the other, a different party from whom the right is secured. Thus, in the Story Case, George "Williams as an individual obtained no right under the contract, because there was only one person in the agreement.

Mr. Judson owned a large farm in southern Illinois. He decided that he would discontinue his farming and move to Chicago, if he could dispose of his property. He told a neighbor, Mr. Jones, of his intention and offered to sell him his farm for $10,000. Mr. Jones also owned a farm, but it was less valuable than the one belonging to Mr. Judson. In reply to the offer of Mr. Judson he wrote him this letter:

"My dear Mr. Judson:

I would like very much to own your farm, but at present I cannot accept your offer. If I am able to sell my farm for a good price in the near future. I will buy yours, unless you have sold it in the meantime.

Respectfully, J. W. Jones".

Some months later Mr. Jones sold his farm for a very good price; when Mr. Judson heard of the sale, he went immediately to Mr. Jones and requested him to purchase the farm according to his agreement. Mr. Jones replied that he had concluded that he would not buy another farm. Thereupon, Mr. Judson brought an action against Jones for breach of a contract.

What should the court hold in this case ?

In this case the plaintiff Stagg had a horse which he desired to sell. When he heard that the defendant wished to purchase a horse, he wrote a letter, offering to sell the animal in question to the defendant for $200.

The defendant some days later wrote the following letter in reply to the plaintiff's letter:

"I think I might purchase your horse at $200, the price you ask me. How can I get it? I desire it at once if it will suit me; I am quite certain it will. Please reply at once, and oblige,

Yours truly,

A. B. Compton".

In an action brought for the price of the horse, the question was whether the foregoing constituted a written contract for the sale of the animal in question.

Those two letters in themselves do not make a written contract between the parties. The offer of the plaintiff was to sell unconditionally. But the defendant did not accept absolutely. He said only that he might purchase the animal, in case it suited him. Since there was no meeting of their minds, the two letters, recited above, did not make a contract between them.

Therefore it was held that there was no written contract for the sale of a horse.

A contract is a relation which is voluntarily assumed by the parties to it. A contractual obligation, speaking of a contract in a strict sense, is never imposed upon a person without his consent. Thus it is a fundamental essential of a contract that there be mutual assent between the contracting parties.

If one party to an agreement is thinking of one thing, and the other is thinking of something else, obviously there is no contract, because their minds have never met upon a common basis. There is no mutual assent.

Again, the parties may understand clearly all the terms of a proposed agreement, but one party may be unwilling at that time to give his binding consent, notwithstanding the fact that he desires to enter the agreement at a future time or makes a favorable remark thereto. But unless he unequivocally and unconditionally assents, mutual assent is lacking and no contract results.

In the Story Case, mutual assent is lacking because Mr. Jones does not agree to the offer made by Jud-son. In fact he clearly states that there is no acceptance. It is obvious that Judson is not obligated to hold the farm for Jones, and that mutuality of contract is lacking. Therefore judgment should be given in favor of Jones.

Mr. Brandon, a dealer in grain, had in his warehouse a large quantity of wheat, which he was attempting to sell as soon as possible. He wrote a letter to the American Milling Company, in which he stated that he was willing and ready to sell 5,000 bushels of wheat at 60 cents per bushel. At the end of the letter he stated that the offer was to be withdrawn unless it was accepted within one day's time. The manager of the American Milling Company received the letter, opened it, but before he read it, was called out of his office. A friend of the manager entered and, as he seated himself at the latter's desk, saw the letter and absent mindedly inserted a zero after the "one", so that the letter read that the offer would be withdrawn unless it was accepted in ten days' time.

The manager read the letter, and four days later wrote an answer accepting the 5,000 bushels of wheat at the stated price. Mr. Brandon had held the offer open as long as he had agreed, and had thereafter sold all the wheat he had on hand. When this was communicated to the American Milling Company, it brought suit to recover damages for a breach of contract, which it claimed to have made with Mr. Brandon.

Was there a binding contract between the parties?

The controversy in this case arose out of an alleged contract to which there were three parties.

The second party, Davis, agreed to do certain paving for the city of Omaha. The city of Omaha, named as the party of the first part, agreed to pay Davis for his work at a certain rate as soon as the work was completed by Davis, and approved by the city engineer. McGavock, who was the third party to the contract promised, among other things, to see to it that Davis paid the wages of the persons employed in doing the paving.

McGavock's obligation or promise was contained in the following:

"And if the laborers are not paid in full by party of the second part, the party of third part agrees to pay for said, labor, or any part thereof, which shall not be paid by the second party within ten days after the money for such labor becomes due and payable".

The foregoing constituted the proposed contract as it was presented to the city for their acceptance. Before they accepted, however, there was inserted by the city authorities an additional clause to the effect that Davis would not be paid for his services until the city of Omaha received certain money from the Commissioners of Douglas County.

Upon this contract, the plaintiff, one of the laborers engaged by Davis, brought this action. For the first time, when the action was begun, McGavock learned that the additional clause had been inserted in the contract without his consent.

The agreement which the defendant signed, and the agreement accepted by the city, were entirely different. It was one thing to agree to pay wages if Davis did not settle within ten days after they fell due, when Davis was to receive money to meet his obligation when the work was done; it was quite another thing to agree to so pay when Davis was not to receive anything until the happening of an independent contingency. Here there was no common understanding between the parties. The proposition made by the defendant, by signing the contract as it was tendered first, was not accepted by the city when it approved an entirely different agreement. Any change which altered the legal effect of the proposal, even if made by a stranger, would, under such circumstances, prevent the concurrence of the minds essential to make a binding contract.

Therefore judgment was given for the defendant, McGavock.

It has just been stated that mutual assent is a fundamental essential of a binding contract. By way of further explanation of that principle, it may be said that the parties must have a distinct, common understanding as to the nature and the terms of the contract. That is, if one party has one thing in mind when he makes an offer, and the person to whom the offer is made has another thing in mind when he accepts, no contract results, because there is no common understanding.

It does not matter how this misunderstanding may arise, provided it is not through the negligence of either. Neither party is bound by the contract. In the Story Case Mr. Brandon intended to give the Milling Company only one day in which to accept, a demand within his rights. The manager of the Milling Company was mistaken as to the time, and, although this mistake was due to no negligence on the part of Brandon, yet from the mistake resulted a misunderstanding between them and the result must be that no binding contract was made by the acceptance of the Milling Company after the expiration of the one day.

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