Story Case

Harry Arlington, a club man in Chicago, invited his friend, Bagby Smith, to a reception to be given by Arlington in his exclusive club. Smith had no evening clothes but, in view of the invitation, he purchased a suit. He knew that he would have no more use for it, since he was leaving for the South Sea Islands immediately after the reception.

On the day preceding the social event, Smith and Arlington had a misunderstanding which resulted in a serious quarrel. Arlington then angrily withdrew his invitation to the reception and warned Smith not to impose his presence upon him socially, on the following evening. Smith replied, by demanding a recompense for the dress suit he had been under expense to purchase. Arlington refused to consider it.

Smith, immediately, brought suit for breach of contract. Should he be allowed to recover?

Ruling Court Case. Charles Bruce Vs. James Bishop, Volume 43 Vermont Reports, Page 161

James Bishop and one Sleeper traded cows. Sleeper, feeling that he was cheated in the transaction, sued Bishop for damages. While this suit was pending in the Court, Charles Bruce, employed by Sleeper, met Bishop, and the conversation turned to the recent cow transaction. Bruce remarked that both cows together were not worth $35. This statement angered Bishop, who then said that the one cow which he traded to Sleeper was worth at least $35. Bruce laughed at this sally; Bishop thereupon boasted: "I will give you $40 for the cow if you will deliver her to me in as good condition as when I traded her to Sleeper." Bruce went away, expressing his intention to get the cow arid bring her to Bishop. Accordingly, he purchased the animal from Sleeper for $15 and drove her to Bishop's home. The latter refused to take her, although it appeared that she was in just as good condition as when she was traded to Sleeper. Thereupon, Bruce brought this action for damages, alleging that Bishop had made a contract with him and that he refused to perform it.

The defense of Bishop consisted in the fact that he did not intend to make any such contract, and that Bruce knew that he was merely boasting, under the sting of the other's raillery.

Decision

Although parties may fulfill the form of making a contract, unless they have the intention to enter into a legally binding contract, the form has no effect. In this case, the circumstances show that Bishop never really intended to repurchase the cow; and Bruce himself was only bantering, and he knew that Bishop did not really intend to enter into such a contract.

Mr. Justice Wheeler said: "Bishop and Sleeper were in litigation about the cow, and Bruce was in the employment of Sleeper at the time when the parties met. Their conversation commenced in the way of bantering between them about the importance of that litigation, and not in the way of making a trade in the usual course of business. We think that the circumstances and testimony tended to show that Bishop's offer was not in earnest and so understood by Bruce".

Judgment was, therefore, given for Bishop in this case.

Ruling Law. Story Case Answer

It is essential to the validity of an agreement that there be a contractual intention. The parties must intend to bind each other in a legal manner. When a person invites another to dinner, and the invitation is accepted, it is obvious that neither intended that such a transaction should be considered a legally binding one. This is true in the Story Case; it is quite evident that it was never intended that Arlington should be legally bound to have Smith at his reception. Therefore, Smith is not entitled to recover any damages. The lack of contractual intention may also be apparent from the conduct of the parties. Words are generally indicative of a person's intention; but if back of the words, we see a lack of contractual intention, the words are not material, if they have not misled either party. In the Court Case of Bruce vs. Bishop, the words would seem to indicate contractual intention. But the circumstances and conduct of both parties clearly showed that there was no contractual intention.