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.
A contract otherwise binding does not lack mutuality because performance is to satisfy a test by the purchaser to determine if it is suitable for his purpose, according to some external standard.1 The fact that the test is to result to the satisfaction of the adversary party, does not render such contract unenforceable if in legal effect2 such performance is sufficient unless the adversary party is honestly dissatisfied with the result.3 A provision that goods which are delivered must be of a specified quality, "according to the judgment" of the purchaser, does not render the contract unenforceable, since the purchaser is required to exercise an honest judgment.4 A contract whereby A bought bonds of B, and B was to furnish a certified transcript of the proceedings authorizing the issuing of such bonds to the satisfaction of A's attorney, was held enforceable.5 The fact that the engineer or architect or one party is to be the final arbiter as to the question of performance, and that no recovery shall be had unless he gives a certificate that such contract has been performed, is held not to make such contract unenforceable, since such contract calls for honest and impartial action on his part.6
11 Rowan v. Hull, 56 W. Va. 335, 47 S. E. 92.
12Butterick Publishing Co. v. Whit-comb, 225 111. 605, 8 L. R. A. (N.S.) 1004, 80 N. E. 247.
13Schultz v. Simmons Fur Co., 46 Wash. 555, 90 Pac. 917.
14Deitz v. Stephenson, 51 Or. 596, 95 Pac. 803.
15Howe v. Howe & Owen Ball Bearing Co., 154 Fed. 820, 83 C. C. A. 536.
16 Hammond v. Barton, 93 Wis. 183, 67 N. W. 412.
17Benedict v. Pincus, 191 N. Y. 377, 84 N. E. 284.
18 Golden v. Claudel, 85 Kan. 465, 118 Pac. 77.
If the effect of such provision, if valid, is to leave the question of performance to the arbitrary determination of one party, a different principle applies.7 Since such party is free to accept performance or to reject it, without regard to its conformity, in fact, to the terms of the contract, no consideration for the promise of the adversary party exists.8 A contract to buy cross-ties made from timber on certain land, if inspected by the vendee's agent and if the vendors were satisfied with the results of such inspection, the vendors reserving the right to deliver no ties if not satisfied with such inspection, was held to be invalid.9 If a construction contract provides that A's engineer shall be the final arbiter of all differences between A and B, and that his measurements and determinations shall be conclusive upon B, but that they shall not be conclusive upon A, such provision renders such contract invalid as not binding upon A.10
1 United States. Quigley v. Spencer Stone Co., 143 Fed. 86, 74 C. C. A. 280.
Alabama. Schleicher v. Light Co., 114 Ala. 228, 21 So. 1014.
Iowa. Livingston v. Chicago & Northwestern Ry., 142 la. 404, 120 N. W. 1040.
Kansas. King v. Mollohan, 61 Kan. 683, 60 Pac. 731; Kistler v. Heartburg, 81 Kan. 191, 105 Pac. 1117.
Kentucky. Smith v. Corbin, 135 Ky. 727, 123 S. W. 277.
Oregon. Livesley v. Johnston, 45 Or. 30, 106 Am. St. Rep. 647, 65 L. R. A. 783, 76 Pac. 946.
2 See ch. LXXXIV.
3 Quigley v. Spencer Stone Co., 143
Fed. 86, 74 C. C. A. 280; Livesley v. Johnston, 45 Or. 30, 106 Am. St. Rep. 647, 65 L. R. A. 783, 76 Pac. 946.
4 Livesley v. Johnston, 45 Or. 30, 106 Am. St. Rep. 647, 65 L. R. A. 783, 76 Pac. 946.
• Michigan, etc., Co. v. Harris, 81 Fed. 928.
6 Quigley v. Spencer Stone Co., 143 Fed. 86, 74 C. C. A. 280.
7 See Sec. 572.
8 Nelson Bennett Co. v. Twin Falls Land & Water Co., 14 Ida. 5, 93 Pac. 789; Lowe v. Ayer-Lord Tie Co. (Ky.), 97 S. W. 383.
9 Lowe v. Ayer-Lord Tie Co. (Ky.), 97 S. W. 383.
The validity of such contracts is frequently upheld by construing provisions which require performance to the satisfaction of the adversary party,11 or which require the certificate of the engineer or architect as a condition precedent to recovery,12 as meaning that such dissatisfaction must be genuine, and by treating such provisions as void if they can not be so construed.13 Such contracts are discussed further under the subject of Performance.14