Summary of McMichael v. Price
S. Ct. OK. 1936
Relevant Facts: Pl, a salesman, who was in the business of selling sand, entered into a contract with df whereby df bound himself to furnish the pl all sand which pl was able to sell, and pl was bound to purchase all of said sand from df. The price was fixed by the terms of the contract at 60 per cent. of the current market price of sand. Pl refused to pay b/c the df’s books were erroneous. The df refused to provide any further sand to the pl.
Legal Issue(s): Whether the intent of Pl, who offered to buy, and Df, who offered to sell, to enter into a K that was mutually binding?
Court’s Holding: Yes
Procedure: The cause was tried to a jury and a verdict returned in favor of pl for $7,512.51. The trial court ordered a remittitur of $2,500, which was duly filed. Thereafter the trial court rendered judgment upon the verdict for $5,012.51, from which judgment df has appealed. Affirmed
Law or Rule(s): In construing a K where the consideration on the one side is an offer or an agreement to sell, and on the other side an offer or agreement to buy, the obligation of the parties to buy and sell must be mutual.
Court Rationale: The obligation to purchase and provide sand to each other was mutually binding upon the parties in absence of contract language. There is no contract language to that effect. The language states that the Pl is “engaged in the business of selling and shipping sand," and the parties based their contract on this predicate. The evidence shows that Pl was a salesman, and Df knew this, and that each anticipated Pl would be able to sell a substantial amt. of sand to the mutual profit of each party. The price to be paid was definite and fixed. Pl was bound to purchase all the sand from the Df he could sell. It was the intent of the parties to enter into a contract which would be mutually binding.
Plaintiff’s Argument: 5-6mos. after the K def, failed, neglected, and refused to furnish the sand which Pl had sold for shipment, df also verbally repudiated and renounced the K.
Defendant’s Argument: The K was a mere revocable offer and not a valid K, the Pl did not own a business and was not obligated to sell any sand. .
In consideration of the mutual promises herein contained, the Df agrees to furnish all of the sand of various grades and qualities which the Pl can sell for shipment to various and sundry points outside of the City of Tulsa, and to load all of said sand in suitable railway cars on said aforesaid switch for delivery to said Frisco Railway Company as initial carrier.
Bi-Lateral K – promise for a promise.
Illusory Promise – A promise is NOT consideration if by its terms the promisor reserves a choice of alternative performances, UNLESS each alternative would be consideration if it alone had been bargained for OR if the alternative would have been consideration and there is or appears a substantial possibility that before the promisor exercises his choice, events may eliminate the alternative which would not have been consideration.