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.
In considering first the types of so called contract, in which mutuality of obligation is lacking, it is evident that if an offer has not been accepted there is really no contract, and hence no remedy will be given either in law or in equity.1 So if certain terms are left open for future negotiation the contract is not complete and no relief, least of all specific performance, can be given.2 Classes of cases presenting these as the controlling facts, are often classed as illustrations of lack of mutuality. If a gratuitous option has been given by defendant to plaintiff, and such option has not been turned into a binding contract by acceptance, specific performance thereof cannot be enforced. Thus a promise to convey realty by the terms of which the vendee has the option to accept and pay for the property, or to refuse it and relieve himself from all liability does not impose any liability on the vendee and hence none on the vendor.3 So a promise to buy corporate stock, which the vendor is not obliged to sell unless he wishes, is not binding on the vendor and hence not on the vendee.4 So a contract of sale, by which the vendee is to pay for the property in fifteen days or give up his rights under the contract and permit the property to be resold is not binding on the vendee, and hence not upon the vendor.5 So an agreement to subscribe to corporate stock if a railroad should be incorporated, which imposes no obligation to incorporate, lacks mutuality.6 In such cases the party who is not bound in terms cannot compel specific performance against the adversary party, if the latter has repudiated the contract before definite acceptance by the former. If, however, such option is given for a valuable consideration, it cannot be withdrawn during the time stipulated for, and on acceptance within the time limited, specific performance may be decreed in a proper case.7 If the option is given for valuable consideration it is held that if accepted within the time limited specific performance may be given, even if before acceptance the vendor has attempted to withdraw the offer by sale to a third person who has notice of the vendee's interests.8 If a gratuitous option has been accepted before it is withdrawn, the original offer is turned into a contract which may be enforced specifically if it possesses the elements requisite thereto.9 Thus election to exercise an option to purchase,10 or to repurchase11 realty, or election to exercise an option to buy stock,12 each makes the original unenforceable offer a valid contract and eliminates the want of mutuality. So if an offer and acceptance cannot be shown from the entire contract between the parties specific performance may be given, even if it. is not embodied in one instrument.13 If the offer contemplates or permits acceptance by acts instead of a specific acceptance by words, such form of acceptance eliminates want of mutuality and makes the contract specifically enforceable.14 Thus A agreed to give to B a lease for producing oil and gas if B would drill a well upon the realty to be leased. By the terms of the agreement B was not required to drill such well, but he nevertheless did so. B was thereupon allowed specific performance against A.15 The view that acceptance of an option makes a contract which may be enforced specifically, assumes, of course, that, in this class of cases, at least, original want of mutuality may be eliminated by subsequent acts of the parties at some time between the date of the original promise and the bringing of the suit. This view must necessarily be taken unless we are to hold that specific performance can be given only when acceptance occurs at the same time as the offer. Many courts which take this view go a little further and hold that the filing of a bill for specific performance is sufficient as an acceptance to make the option into an enforceable contract.16 In other cases it seems to be held that an option not originally enforceable cannot by subsequent acceptance become enforceable in a suit for specific performance.17
7 Hapwood v. McCausland, 120 la. 218; 94 N. W. 469.
1 Fisher v. Buchanan, 2 Neb. Un official 158; 96 N. W. 339; Kennedy v. Parmelee (Neb.). 91 N. W. 490.
2 Lasher v. Gardner. 124 111. 441; 16 N. E. 919.
3 Goodale v. Hill. 42 Conn. 311; Winter v. Trainor. 151 111. 191; 37 N. F 869: Graybill v. Brugh, 89
Va. 895; 37 Am. St. Rep. 894: 21 L. R. A. 133; 17 S. E. 558.
4 Hissam v. Parrish. 41 W. Va. 686; 56 Am. St. Rep. 892; 24 S. E. 600.
5 Bodine v. Glading. 21 Pa. St. 50; 59 Am. Deo. 749.
6 Strasbursr Ry. v. Eehternacht, 21 Pa. St. 220; 60 Am. Dec. 49.
7 Mathews Slate Co. v. Slate Co., 122 Fed. 972; Calanchini v. Bran-stetter, 84 Cal. 249; 24 Pac. 149; Hamilton v. Hamilton, - Ind. -; 70 N. E. 535; Bacon v. Ry., 95 Ky. 373: 25 S. W. 747.
8 Black v. Maddox, 104 Ga. 157; 30 S. E. 723.
9 Ross v. Parks, 93 Ala. 153; 30 Am. St. Rep. 47; 11 L. R. A. 148; 8 So. 368; Sayward v. Houghton, 119 Cal. 545; 51 Pac. 853; 52 Pac. 44; Black v. Maddox, 104 Ga. 157; 30 S. E. 723; French v. National Bank, 179 Mass. 404; 60 N. E. 793; Warren v. Costello, 109 Mo. 338; 32 Am. St. Rep. 669; 19 S. W. 29; Ide v. Leiser, 10 Mont. 5; 24 Am. St. Rep. 17; 24 Pac. 695; Tidball v. Chalburg, - Neb. - ; 93 N. W. 679; Donahue v. Potter & George Co.. 63 Neb. 128; 88 N. W. 171; Bigler v.
Baker, 40 Neb. 325; 24 L. R. A. 255; 58 N. W. 1026; Woodruff v. Woodruff, 44 N. J. Eq. 349; 1 L. R. A. 380; 16 Atl. 4; Hawralty v. Warren, 18 N. J. Eq. 124; 90 Am. Dec. 613; Bradford v. Foster, 87 Tenn. 4; 9 S. W. 195; Cherry v. Smith. 3 Humph. (Tenn.) 19; 39 Am. Dec. 150; Barrett v. McAllister, 33 W. Va. 738; 11 S. E. 220; Weaver v. Burr, 31 W. Va. 736; 3 L. R. A. 94; 8 S.'E. 743.
10 Bigler v. Baker, 40 Neb. 325; 24 L. R. A. 255; 58 N. W. 1026.
11 Woodruff v. Woodruff, 44 N. J. Eq. 349; 1 L. R. A. 380; 16 Atl. 4.
12 Sayward v. Houghton, 119 Cal. 545; 51 Pac. 853; 52 Pac. 44.
13 Gates v. Dudgeon, 173 N. Y. 426; 93 Am. St. Rep. 608; 66 N. E. 116.
14 Storm v. United States. 94 U. S. 76; Welch v. Whelpley, 62 Mich. 15; 4 Am. St. Rep. 810; 28 N. W. 744; Smith v. Gibson, 25 Neb. 511; 41 N. W. 360; Boyd v. Brown, 47 W. Va. 238; 34 S. E. 907. " Want of mutuality is no defense even in an action of specific performance where the party not bound thereby has performed all of the conditions of the contract and brought himself clearly within its terms." Syllabus of Bigler v. Baker, 40 Neb. 325; 24 L. R. A. 255; 58 N. W. 1026; quoted in Rank v. Garvey, - Neb. - ; 92 N. W. 1025.
15 Boyd v. Brown, 47 W. Va. 238; 34 S. E. 907.
16 Woodruff v. Woodruff. 44 N. J. Eq. 349; 1 L. R. A. 380; 16 Atl. 4.
" The filing of the bill for specific performance itself supplied the element of mutuality if it was theretofore wanting." Black v. Maddox, 104 Ga. 157, 165; 30 S. E. 723. " When such contracts come to be enforced in equity they cease to be unilateral, for upon the filing of the bill the party who was before unbound puts himself under the obligation of the contract. By his own act he makes the contract mutual and the other party is enabled to , enforce it." Richards v. Green, 23 N. J. Eq. 536. 537; quoted in Woodruff v. Woodruff. 44 N. J. Eq. 349, 355; 1 L. R. A. 380; 16 Atl. 4.
17 Benedict v. Lynch. 1 John3. Ch. (N. Y.) 370; 7 Am. Dec. 484.
In some of the cases which seem to support this view, however, the contract is oral, and the question of part performance enters in.18