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 clear type of the incomplete agreement is one in which certain terms are agreed on, but other terms are to be settled by future negotiations between the parties.1 An offer which leaves the amount of compensation to be determined by subsequent negotiation, fixing only the extreme limits within which the negotiations are to range;2 or a contract to the effect that A should have the privilege of doing whatever extra work B might require to be done upon B's premises at such prices as the parties might agree upon,3 or one which leaves to a future valuation between the parties the price to be paid for realty,4 as where a part of the purchase price was to be paid "by adjustment of mortgages,"5 or which leaves for future agreement the price to be paid for personalty, 6 or one which leaves the quantity of material to be furnished,7 or the quality 8 as a sale subject to the approval of samples to be furnished,9 or a sale of an article, the specifications thereof being left for future determination,10 or a contract which leaves for future determination the character of buildings to be erected,11 or the land to be sold,12 or the terms of payment and security for the purchase price,13 as a contract to sell land at a certain price "for cash on delivery of
8 Elks v. North State Life Insurance Co., 159 N. Car. 619, 75 S. E. 808.
9 Carr v. Louisville & N. R. Co., 141 Ga. 219, 80 S. E. 716.
10 Rahm v. Cummings, 131 Minn. 141, 155 N. W. 201.
11 Crawford v. Williford, 145 Ga. 550, 89 S. E. 488.
12 Prior v. Hilton & Dodge Lumber Co., 141 Ga. 117, 80 S. E. 559.
13 Croschke v. Armour Fertilizer Works, 245 Fed. 513, 158 C. C. A. 9.
14 Carlock v. Johnson, 165 Wis. 49, 160 N. W. 1053.
15 Lombard v. Carter, 7 Wash. 4, 38 Am. St. Rep. 861, 34 Ac. 209.
16 Roberta Mfg. Co. v. Royal Exch. Assurance Co., 161 N. Car. 88, 76 S. E. 865.
17 Ogle Lake Shingle Co. v. National Lumber Ins. Co., 68 Wash. 185, 122 Ac. 990.
18 Miller v. Crusel, 135 La. 649, 65 So. 873.
1 Alabama. Rushton v. McKee, - Ala. - , 77 So. 343.
Arkansas. Somers v. Musolf, 86 Ark. 97, 109 S. W. 1173.
California. McAfee v. Fisher, 64 Cal. 246.
Florida. Strong & Trowbridge Co. v. Baars, 60 Fla. 253. 54 So. 92.
Kansas. St. Louis & S. F. R. Co. v. Gorman, 79 Kan. 643. 28 L. R. A. (N.S.) 637. 100 Ac. 647.
Louisiana. United Fruit Co. v. Louisiana Petroleum Co., 115 La. 181, 38 So. 958.
Maryland. Somerville v. Coppage, 101 Md. 519, 61 Atl. 318.
Montana. Livingston Waterworks v. Livingston, 53 Mont. 1, L. R. A. 1917D, 1074, 162 Ac. 381.
North Carolina. Elks v. North State Life Ins. Co., 159 N. Car. 619, 75 S. E. 808.
Oregon. Holtz v. Olds, 84 Or. 567, 164 Ac. 583 [rehearing denied, Holtz v. Olds. 84 Or. 567, 164 Ac. 1184].
Wisconsin. Goldstine v. Tolman, 157 Wis. 141, 147 N. W. 7.
2 Anderson v. Dezonia, 23 111. App. 422.
3 Sofers v. Musolf, 86 Ark. 97, 109 S. W. 1173.
4 Wardell v. Williams, 62 Mich. 50, 4 Am. St. Rep. 814, 28 N. W. 796.
5 Leslie v. Mathwig, 131 Minn. 159, 154 N. W. 951.
6 Gunn v. Newcomb, 82 la. 468, 48 N. W. 989: James Leffel Co. v. Hall, 168 N. Car. 407, 84 S. E. 695.
7 American, etc., Co. v. Bridge Co., 29 Or. 549, 46 Ac. 138.
8 Jobst-Bethard Co. v. Glenwood Canning Co., 129 la. 117, 105 N. W. 385.
9 Jobst-Bethard Co. v. Glenwood Canning Co., 129 la. 117. 105 N. W. 385.
10 Schwab Safe &. Lock Co. v. Snow, 47 Utah 199, 152 Pas. 171.
11 Bissenger v. Prince, 117 Ala. 480, 23 So. 67; Mayer v. McCreery, 119 N. Y. 434, 23 N. E. 1045.
12 Booth v. Milliken, 194 N. Y. 553, 87 X. E. 1115.
13 Sands, etc., Co. v. Crosby, 74 Mich. 313. 41 N. W. 899; Monahan v. Allen, 47 Mont. 75, 130 Ac. 768.
deed or one-half on time if terms can be agreed on,"14 or which fails to fix the rate of interest which deferred payments are to bear, leaving such rate for future negotiation,15 is not complete. Negotiations for shipping goods which leave open for future determination, the choice between two forms of charter parties at different rates, do not constitute a contract.16 An offer for a lease subject to alterations to be agreed upon later, is incomplete on its face.17 If the negotiations between the parties show that they intended to make the compensation for certain services some fraction of the result of such services to be agreed upon later, an offer to do the work is not accepted by a letter which says, "We will be glad to accept your offer * * *, and if there is anything in it, you will get your share as well as" ourselves.18
In some cases, however, this principle has not been applied consistently, and contracts have been enforced, although certain material terms were left open for future agreement.19 A provision in a contract between a municipal corporation and a water company, which contract was to last for twenty-five years, to the effect that if the city did not purchase the waterworks upon certain specified terms, the contract to be renewed "for twenty-five years longer upon terms as mutually agreed upon at that time," was held to be sufficiently definite, upon the theory that such provision required a renewal upon reasonable terms in case the parties could not agree upon specific terms; and accordingly such contract can not be impaired by subsequent legislation.20 A contract between a railway company and a municipal corporation, by which such railway company agrees that other railways may use its right of way "upon such terms and for such fair and equitable compensation to be paid to it therefor, as may be agreed upon by such companies," was held to be valid and enforceable; and if such railway companies could not, in fact, agree, it was held that the court would fix reasonable regulations, terms and compensation.21 If a railway company, in consideration of a modification of its former rights in its right of way, agrees to construct a private crossing at a point to be agreed upon by the grantor and the agent of such railway, such provision is sufficiently definite; and if the parties can not agree upon the point at which such crossing is to be constructed, the chancellor will locate such crossing.22 A provision in a written contract for the sale of land, "the rents and taxes will be adjusted at the time of the delivery of the deed," has been held not to render the contract invalid, since such rights are defined in the absence of agreement, by statute as to the taxes and by common law as to the rents.23 A contract to sell land at a certain price per acre, the survey determining the area to be made "by a competent surveyor to be mutually agreed upon," was held to be sufficiently certain, so that if the parties could not agree upon the surveyor, the court could fix the area and thus determine the price.24 A contract to erect a building for a store on a certain tract of land at some convenient place, thereon to be agreed on by the parties afterwards, has been held to be sufficiently complete.25 "Where covenants, which reserve details for future agreement, are enforced, the party who is resisting such performance has, in some cases, acquired property rights under the remaining provision of the contract and is in possession and in enjoyment thereof.26 Frequently the contract is one with a public service company and is intended for the benefit of the public at large, as well as for the benefit of the party in whose favor such covenants,are made; and accordingly even if rescission would be an adequate remedy under such facts, in a contract which did not involve the public interest, the injury to the public if the contract were rescinded, would be such as to prevent the court from applying such remedy.27 Frequently the contract provides for a lease renewal and the like, upon fair and "equitable" terms or upon "reasonable" terms, and the court can say, with some show of enforcing the contract that has been made, rather than of making a new contract for the parties, that the essential feature of such contract is the lease or renewal upon fair, equitable, and reasonable terms, and that the provision for a future agreement as to such terms is a mere incident.28 The same principle has been applied where the price depended upon the area as ascertained "by a competent surveyor, mutually agreed upon," and it was held that the main intent was to ascertain the area, to which the covenant for the selection of a surveyor was merely an incidental means.29 There are still left cases, after taking out all the foregoing classes of cases, in which no property right has as yet vested, in which no public interest is affected, and in which the main purpose of the parties was to leave certain terms for future negotiation, and in which the court has, nevertheless, fixed terms for parties who would not agree upon such terms themselves.30 A contract whereby A agreed to furnish oil to B for a year if A's wells continued to gush, and which provided that if such wells ceased to gush, such contract and the price to be paid, were to be modified as the parties might agree, is so indefinite that it can not be enforced if the wells cease to gush.31 A provision in a contract between a city and a water supply company to the effect that if the city does not purchase the plant of the water company at the expiration of the original contract, such contract shall be renewed "upon such terms as are mutually agreed upon at that time," can not be enforced; and if the city and the water company can not agree upon such terms, the court can not fix them for the parties, even though the only term upon which the parties have not agreed is the water rate, and the original contract provides that the rate upon which the parties are to agree is not to exceed the rate in the original contract.32 Negotiations in which A offers to investigate B's title to certain land and perfect the same, do not amount to a contract if the parties have not agreed upon the amount to be paid to A for his services in case of his success.33