Story Case

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 At the end of the letter he stated that the offer was to be withdrawn unless it was accepted within one day's time.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saw the letter and absent mindedly inserted a zero after the "one", so that the letter read that the offer would be withdrawn unless it was accepted in ten days' time.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?

Ruling Court Case. Morton Vs. Mcgavock, Volume 57 Nebraska Reports, Page 385; Volume 77 Northwestern Reporter, Page 785

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.

Decision

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.

Ruling Law. Story Case Answer

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.