Citation. 296 F. 693 (Circuit Court of Appeals, Fifth Circuit, 1924)
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Brief Fact Summary.
A bottling company agreed to promote the sale of another company's beverage. However, the contract allowed the beverage company to break the contract whenever it pleased.
Synopsis of Rule of Law.
A contract is void due to a lack of mutuality when "it can be terminated at the will of one of the parties to it."
The Appellee, Orange Crush Co. (the "Appellee"), entered into a contract in the form of a license with the Appellant, the Miami Coca-Cola Bottling Company (the "Appellant"). The Appellee granted the Appellant the "exclusive right, within a designated territory, to manufacture a certain drink called 'orange crush,' and to bottle and distribute it in bottles under appellee's trade-mark." The Appellee agreed to supply concentrate to be used in manufacturing of orange crush at quoted prices, and to do certain advertising. The Appellant agreed to purchase a certain amount of concentrate, maintain a bottling plant, solicit orders and promote the sale of orange crush to increase sales volume. The contractual license granted to the Appellant was perpetual, but the Appellant could, at any time, cancel the contract. A year after the contract commenced, the Appellee gave the Appellant written notice it could no longer be bound. The district court found the contract was void for lack of mutuality.
Is the contract unenforceable due to lack of mutuality?
Yes, the contract is void due to a lack of mutuality because "it can be terminated at the will of one of the parties to it." Although the consideration was a promise for a promise, the Appellant did not promise to do anything. Also, the Appellant at any time could cancel the contract.
• Additionally, the contract cannot be saved under a continuing option theory because for a valid option there needs to be consideration and there is no consideration here.
It is interesting to read this case alongside [Mezzanotte v. Freeland].