Summary of Sylvan Crest Sand v. U.S.
U.S. Ct. of App. 1945
Relevant Facts: The pl owned and operated a trap rock quarry and entered an agreement for trap rock to aid in the construction of an airport. 4000 tons, unit price $2.00 amount $8000. To be delivered to project as required. Delivery to start immediately. This is an action for damages for breach of 4 contracts under each of which the pl was to deliver trap rock to an airport project 'as required' and in accordance with delivery instructions to be given by the df. The breach alleged was the df's refusal to request or accept delivery within a reasonable time after the date of the contracts, thereby depriving the pl of profits it would have made in the amount of $10,000.
Legal Issue(s): Whether the U.S. “acceptance," of Pl’s promise to deliver rock at the stated price operated as sufficient consideration to make the Pl’s promise binding?
Court’s Holding: Yes, as long as each of the alternatives could stand alone as consideration.
Procedure: Action by the Sylvan against the U S for breach of 4 contracts to purchase trap rock from pl. From a summary judgment for the government, pl appeals. Reversed and remanded trial.
Law or Rule(s): 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.
Court Rationale: The words should be so construed as to support the contract and not render illusory the promises of both parties. This can be accomplished by interpolating the word 'reasonable', as is often done with respect to indefinite time clauses. Where one party's reservation of option to cancel does not wholly defeat consideration, contract is not nudum pactum. The promisor has an option between two alternatives, and the promise is not illusory if each alternative is sufficient consideration if it alone were bargained for. The agreement obligated the df to give delivery instructions or notice of cancellation within a reasonable time. This constituted consideration for the pl's promise to deliver in accordance with delivery instructions, and made the agreement a valid contract. The U S promised by implication to take and pay for the trap rock or give notice of cancellation within a reasonable time. The alternative of giving notice was not difficult of performance, but it was a sufficient consideration to support the contract.
Plaintiff’s Argument: The df's reservation of an unrestricted power of cancellation caused the contracts to be wholly illusory as binding obligations, the notice of cancellation time is infinite.
Defendant’s Argument: Under the agreement the government's obligation to give delivery instructions or notice of cancellation is within a reasonable time, and constituted consideration for contractor's promise to deliver in accordance with instructions, and made the agreement a valid contract.
Interpolating – distributed
A promise is not made illusory by the fact that the promissor has an option between two alternatives, if each alternative would be sufficient consideration if it alone were bargained for.
Nudum pactum – a voluntary promise w/o consideration
Option K – If a promisor has an option between two alternatives, so long as either alternative is sufficient consideration, the K is valid, not illusory.