Wickham & Burton Coal Co. v. Farmers’ Lumber Co.

Brief Fact Summary.

Plaintiff and Defendant entered into a contract where Plaintiff would supply Defendant The trial court ruled in favor of Plaintiff. Defendant appealed.

Synopsis of Rule of Law.

A contract for sale is void for lack of mutuality if there is an obligation to sell but no obligation to purchase or an obligation to purchase but no obligation to sell.

Facts.

Wickham & Burton Coal Co. (Plaintiff) and lumber company Farmers’ Lumber Co. (Defendant) entered into an oral agreement whereby Plaintiff agreed to provide Defendant all the coal Defendant required at a specified price. Plaintiff filed demurrer stating (1) arrangement between parties is void for uncertainty; (2) lack of consideration; and (3) lacks mutuality of obligation. Defendant filed a counterclaim because it was forced to purchase coal on the open market at a rate higher than the contract rate, seeking the difference between the market price and the contract price. A judgment was rendered for Plaintiff. Defendant appealed.

Issue.

Whether a contract for sale is enforceable if the only obligation of the parties is that the seller must provide all that the buyer requires.

Held.

No. The trial court’s ruling is reversed. A contract for sale is void for lack of mutuality if there is an obligation to sell but no obligation to purchase or an obligation to purchase but no obligation to sell.

Discussion.

A contract of sale is mutual where it contains an agreement to sell on the one side and an agreement to purchase on the other and is not mutual where there is an obligation to sell but no obligation to purchase or an obligation to purchase but no obligation to sell. A promise may be consideration for another promise only if there is an absolute mutuality of engagement, so that each party has the right at once to hold the other to a positive agreement. Here, Plaintiff was obligated to sell all the coal Defendant wished to purchase but Defendant did not obligate himself to purchase any coal at all. Thus, the contract was void for lack of mutuality.