This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If the contract by its terms reserves to one of the parties the right to terminate it for some specified cause or upon the happening of some certain event and not at his arbitrary discretion, such provision does not prevent such promise from amounting to a consideration; and, accordingly, such contract is valid.1 A promise to pay "on acceptance" of the goods does not give to the buyer the power to reject arbitrarily.2 A provision that one party may at his option terminate the contract if the other party defaults, does not prevent consideration from existing.3 If A, who is a promoter of a corporation, has entered into a contract to purchase the stock of B,
18 Farmers' Handy Wagon Co. v. Newcomb (Mich.), 159 N. W. 152.
19 Farmers' Handy Wagon Co. v. Newcomb (Mich.), 159 N. W. 152.
1 Franklin Telegraph Co. v. Harrison, 145 U. S. 459, 36 L. ed. 776.
2 Philadelphia Ball Club v. Lajoie, 202 Pa. St. 210, 90 Am. St. Rep. 627, 58 L. R. A. 227, 51 Atl. 973.
Contra, Weegham v. Killefer, 215 Fed. 168 [affirmed, Weegham v. Killefer, 215 Fed. 289].
3Vogel v. Pekoc, 157 111. 339, 30 L. R. A. 491, 42 N. E. 386.
4 Woodward v. Smith, 109 Wis. 607, 85 N. W. 424.
1 United States. Mayo v. American Malting Co., 211 Fed. 945.
Illinois. Apitz v. Supreme Lodge Knights & Ladies of Honor, 274 111. 196, L. R. A. 1917A, 183, 113 N. E. 63.
Nebraska. Carter White Lead Co. v. Kinlin, 47 Neb. 409, 66 N. W. 536.
Tennessee. Fourth Nat. Bank v. Stahlman, 132 Tenn. 367, L. R. A. 1916A, 568, 178 S. W. 942.
West Virginia. Beury v. Fay, 73 W. Va. 460, 80 S. E. 777; Berry v. Humphreys, 76 W. Va. 668, 86 S. E. 588.
2 Lehman v. Salzgeber, 124 Fed. 479.
3 Mayo v. American Malting Co., 211 Fed. 945, 128 C. C. A. 443; Fourth Nat. Bank v. Stahlman, 132 Tenn. 367, L. R. A. 1916A, 568, 178 S. W. 942; Beury v. Fay, 73 W. Va. 460, 80 S. E. 777; Berry v. Humphreys, 76 W. Va. 668, 86 S. E. 568.
who is a stockholder, a clause in such contract to the effect that B may treat such contract as discharged and may sell such stock to others, if A does not perform the contract on his part, does not prevent consideration from existing.4 A provision that the vendor is to retain certain amounts of the money which has been deposited with him, as liquidated damages if the vendee refuses to perform, does not prevent the transaction from amounting to a contract of sale.8 A clause which provides that the seller may have the option of canceling the contract or as acting as bailee of the goods sold, and as charging storage for such goods in case the buyer fails to order the quantity of goods fixed by the contract within the time specified therein, does not render such contract invalid.6 If the event upon which liability is to terminate is one which is within the control of the promisee, a provision ending the promisor's liability upon the happening of such event does not prevent the existence of consideration.7 A by-law of a mutual benefit association, which provides for the suspension of members who disappear, does not render the entire transaction invalid, and it is itself a valid provision.8 A contract where A agrees to give B permanent employment, subject to the right to remove B for cause, is a consideration for B's agreement to release a claim for damages.9
If the event upon which the liability of the promisor is to cease, is one which is not within the control of the promisor or the promisee, a provision terminating the liability upon the happening of such event, does not prevent consideration from existing.10 A provision which relieves one of the contracting parties from liability in case of strikes or lockouts, does not render the entire transaction invalid.11 A contract to furnish electricity at a certain price, reserving to the company furnishing it the right to begin the service, so as to incur no liability for breach in case of strikes or inability to secure employes which might cause delay in beginning the service, is valid.12
4Fourth Nat. Bank v. Stahlman, 132 Tenn. 367, L. R. A. 1916A, 568, 178 8. W. 942.
5 Beury v. Fay, 73 W. Va. 460, 80 6. E. 777.
6Mayo v. American Malting Co., 211 Fed. 945, 128 C. C. A. 443.
7 Royal Arcanum v. Vitzthum, 128 Md. 523, L. R. A. 1917A, 179, 97 Atl. 923.
8Royal Arcanum v. Vitzthum, 128
Md. 523, L. R. A. 1917A, 179, 97 Atl. 923.
9 Rhoades v. Ry., 49 W. Va. 494, 87 Am. St. Rep. 826, 55 L. R. A. 170, 39 S. E. 209.
10KIosterman v. United Electric Light & Power Co., 101 Md. 29, 60 Atl. 251.
11 Klosterman v. United Electric Light & Power Co., 101 Md. 29, 60 Atl. 251.