(P) Miami Coca-Cola Bottling Co. v. Orange Crush Co.

(D) NATURE OF CASE: appeal from dismissal of action for specific performance and injunctive relief FACTS: Miami Coca-Cola could cancel its contract with Orange Crush at any time, while Orange Crush was bound to perform indefinitely Orange Crush agreed to give Coke an exclusive right to sell Orange Crush in a designated territory and to supply it with concentrates and advertising this agreement was in the form of a PERPETUAL LICENSE Coke agreed to sell Orange Crush and operate a bottling company for its production as well as using its best efforts to sell it Coke was free to terminate the relationship at any time Orange Crush informed Coke that it was terminating the license Coke sued to enjoin cancellation and to compel performance the court found that the contract was unenforceable for want of mutuality performance RULE OF LAW: Where one party's obligation may be terminated at any time, mutuality of performance will allow the other party to terminate at any time regardless of its contractual obligation ISSUE: Will specific performance be denied for want of mutuality of performance ? HOLDING: Yes. Specific performance of a contract will be denied for want of mutuality of performance. There must be a promise for a promise. Here Coke may terminate the contract at any time. Under such circumstances, Orange Crush cannot be held liable on its perpetual license promise *there must be mutuality between specific terms, absent such mutuality, the term will not be deemed binding.

TERMS: injunctive relief: a court order issued as a remedy, requiring a person to do, or prohibiting that person from doing a specific act mutuality of performance: the requirement for a valid contract that the parties be required to perform specific performance: an equitable remedy whereby the court requires the parties to perform their obligations pursuant to a contract Johnson Lake Development v. Central Nebraska Public Power FACTS: Central and JLD entered into a written lease agreement pertaining to land owned by Central Agreement: the district does hereby lease to JLDI for a period of 31 years from this date the various properties or lands owned by the district.. the district shall have complete power and authority to cancel or terminate this agreement at any time it so desires by giving JLD written notice of such intentions at least 6 months in advance Central wanted to enter into a modification agreement with JLD to provide among other things, for the payment of fair and reasonable rent for the personal benefit received from the use of the property owned by central if JLD failed to do so Central authorized to begin process of terminating lease failed to reach an agreement ISSUE: whether lease gives central a right to cancel or terminate by giving JLD written notice of such intent at least 6 months in advance (does/language plane in text) whether parties may legally contract for a leasehold of at least 30 years duration, with the lessor reserving a unilateral right to terminate the lease for any reason upon the giving of 6 months written notice HOLDING: the requirement that central give JLD 6 months in advance written notice of its intent to terminate the lease, and the fact that the lease would remain in effect during that 6 month period was sufficient to establish the requisite mutuality. Central is entitled to partial summary judgment. RULE OF LAW: *in agreements which seem to reserve the right to cancel at any time, it is reasonable though interpretation to take the position that notice of cancellation is required, and, even though notice may be given at any time, it

constitutes a detriment, hence, valid consideration detriment: the promisee gives up something of value or circumscribes his liberty in some way In the power to terminate...if the power is exercised, both parties are freed from their promissory duties. If it is not exercised, neither is freed. It does not appear to involve an attempt to get something for nothing, and there is no such result whether the power is exercised or not the enforceability of unilateral powers to terminate contracts have held that such powers do not render a contract illusory so long as the party reserving the power to terminate is irrevocably bound for any appreciable period of time or has materially changed any of his legal relations or otherwise rendered some performance capable of operating as consideration...even a slight restriction on the exercise of the right of termination, such as the requirement that advance notice be given, is sufficient to prevent a unilateral right of termination from being regarded as illusory in nature Scott v. Moragues Lumber Co

FACTS: Scott (D) offered to charter a boat to Moragues Lumber (P) for transporting a cargo of lumber. The offer was contingent on scott buying a particular american vessel in chile. Moragues accepted the offer and scott purchased the vessel. Before the vessel was delivered to scott, and without notifying Moragues that he had purchased it, scott chartered the vessel to a third party scott told the lumber company that if he bought a ship, he'd ship their lumber. This created an EXPRESS CONDITION. Neither party was bound until the condition was fulfilled. Indeed, scott did buy a ship, but he chartered it to someone else. The lumber company was upset. The court held that scott was bound to the contract as soon as he bought the ship P sued D for breach of the agreement and sought damages of $13,000. The trial court entered a judgment in favor of P and D appealed ISSUE: can a contract be conditioned upon the happening of a future event under the control of one of the parties to the contract? HOLDING: Yes. A contract can be conditioned upon the happening of a future event under the control of one of the parties to the contract. Such a contract is not void for lack of consideration or mutuality of obligation. D was not bound to purchase the vessel and if D had never purchased it there would be no contract If he did, then condition is extinguished as though it had never been stipulated and the contract provision that remain if they constitute a contract can be enforced P accepted D's offer of charter before the purchase LEGAL RULE: Appellant was not bound to purchase the vessel; but, when he did, the offer--or the contract, if the offer had been accepted--thereafter remained as if this condition had never been stipulated, its mutuality or other necessary incidents of obligation depending upon its other provisions and the action of the parties thereunder. *A valid contract may be conditioned upon the happening of an event (related or not to the contract itself), even though the event may depend upon the will of the party who afterwards seeks to avoid its obligation. Wood v. Lucy

NATURE OF CASE: action for damages for breach of a contract for an exclusive right FACTS: Wood (P), in a complicated agreement, received the exclusive right for one year, renewable on a year-toyear basis if not terminated by 90 days notice, to endorse designs with lucy's (D) name and to market all her fashion designs for which she would receive one half of the profits derived. Lucy (D) broke the contract by placing her endorsement on designs without Wood's (P) knowledge Lucy (D) a famous name fashion designer contracted with wood that for her granting to him an exclusive right to endorse designs with her name and to market and license all of her designs, they were to split the profits derived by wood in half. The exclusive right was for a period of one year, renewable on a year to year basis, and terminable upon 90 days notice. Lucy placed her endorsement on fabrics, dresses, and millinery without wood's knowledge and in violation of the contract. Lucy claims that the agreement lacked the elements of a contract as wood allegedly is not bound to anything RULE OF LAW: while an express promise may be lacking, the whole writing may be instinct with an obligation

an implied promiseimperfectly expressed so as to form a valid contract ISSUE: if a promise may be implied from the writing even though it is imperfectly expressed, is there a valid contract? HOLDING: Yes. While the contract did not precisely state that wood had promised to use reasonable efforts to place lucy's endorsement and market her designs, such a promise can be implied. The implication arises from the circumstances. Lucy gave an exclusive privilege and the acceptance of the exclusive agency was an acceptance of its duties. Lucy's sole compensation was to be one half the profits resulting from wood's efforts. Unless he gave his efforts, she could never receive anything. Without an implied promise, the transaction could not have had such business efficacy as they must have intended it to have. Woods promise to make monthly accounts and to acquire patents and copyrights as necessary showed the intention of the parties that the promise has value by showing that wood had some duties. The promise to pay lucy half the profits and make monthly accounts was a promise to use reasonable efforts to bring profits and revenues into existence ANALYSIS: a bilateral contract can be expressed, implied in fact, or a little of each. The finding of an implied promise for the purpose of finding sufficient consideration to support an express promise si an important technique of the courts in order to uphold agreements which seem to be illusory and to avoid problems of mutuality of obligation. Where an agreement for exclusive dealing in goods imposes, unless otherwise agreed, an obligation to use best efforts by both parties

TERMS: bilateral contract: an agreement pursuant to which each party promises to undertake an obligation, or to forbear from acting, at some time in the future implied promise: a promise inferred by law from a document as a whole and the circumstances surround its implementation Mattei v. Hopper FACTS: Mattei (P) a real estate developer sought to purchase property owned by Hopper (D) for a new shopping center. After lengthy negotiations Mattei accepted Hopper's offer to sell for $57,000. under the agreement Mattei was required to deposit $1,000 with the real estate agent and had 120 days to examine the title and consummate the purchase, at which time the balance of the purchase price was due. The agreement also contained a personal satisfaction clause whereby Mattei was excused from performance if he was unable to arrange satisfactory leases of space in the shopping center before the 120 days had elapsed, hopper's attorney notified Mattei that she would not sell her land under the terms of the agreement. Hopper refused to complete the transaction and Mattei sued for breach of contract. The trial court entered judgment for Hopper and Mattei appealed ISSUES: does a personal satisfaction clause necessarily render a contract illusory or void for lack of consideration or mutuality? If a party does not assume a legal duty in making a promise, is the agreement binding as a bilateral contract? Where a contract consists of an exchange of promises, must the promises be mutual in obligations? Holding no. a personal satisfaction clause does not necessarily render a contract illusory or void for lack of consideration or mutuality no. if a party is not assuming a legal duty in making a promise, the agreement is not binding as a bilateral contract yes. When the parties attempt to make a contract where promises are exchanged as the consideration, the prom sises must be mutual in obligation an agreement that lacks mutuality of obligation lacks consideration and is unenforceable. Mutuality of obligation exists when both parties have assumed some legal obligation. If the agreement leaves on party free to perform or to withdraw from the agreement at his own unrestricted pleasure, the promise is illusory and lacks consideration satisfaction clauses are divided into 2 primary categories that are treated differently by the courts 1) In those contracts where the condition calls for satisfaction as to commercial value or quality,

operative fitness, or mechanical utility, dissatisfaction cannot be claimed arbitrarily, unreasonably, or capriciously. The standard of a reasonable person is used in determining whether satisfaction has been received. 2) In contracts where the issue of satisfaction involves fancy, taste, or judgment, the promissors good faith determination that he is not satisfied is a defense to breach of contract. The requirement to act in good faith prevents constitutes consideration and the contract is enforceable. The party is not released from the agreement merely because he has become dissatisfied with the contract itself. He must have a genuine, good faith dissatisfaction with the performance. This case falls into the second category because the factors involved in determining whether a lease is satisfactory to the lessor are too numerous and varied to permit the application of a reasonable man standard. The contract was neither illusory nor lacking in mutuality of obligation.