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THB BUSINESS LAW JOURNAL COMPANY

71-73 MURRAY STREET

NEW YORK CITY

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JOHN EDSON BRADY, Editor

VOL. 3

JANUARY, 1924

No. 1

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The Making of a Binding Contract
HEN the parties to an agreement for the sale of goods or
services have a different understanding as to the identity of

the subject matter of the sale, no binding contract is made. As stated in the text-books on the law of contracts, “there can be no binding contract unless the minds of the parties meet.” And where one of the parties has one thing in mind and the other has something entirely different in mind, it is clear their minds cannot meet.

The point is well illustrated in a leading English case, Raffles y. Wichelhaus, 2 H. & C. 906. In this case, the plaintiff agreed to sell to the defendant a quantity of cotton, to arrive on the ship Peerless from Bombay. There were two ships having the name Peerless, both sailing from Bombay. The buyer meant the Peerless arriving in October, while the seller meant the Peerless arriving in December. It was held that no contract had been made.

A more recent illustration is found in the decision of the Supreme Judicial Court of Maine, Allen v. Rockland Wholesale Grocery Co., 122 Atl. Rep. 414. The plaintiff, Franklin W. Allen, operating a reporter service, sent out a circular letter offering to furnish the complete official report of hearings before the Federal Trade Commission, involving unfair competitive methods employed by wholesale grocers, at the price of 15 cents per page.

The circular sent out was in the following form:

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Unfair Competitive Methods in the Grocery Trade Federal Trade Com

mission Docket Number 579 Dear Sir-If you are interested in the above hearings, involving unfair competitive methods employed by wholesale grocers, and wish to obtain copies of the complete official report of these hearings before the Federal Trade Commission, which are of unusual importance and interest to the grocery trade, and which we will furnish by agreement with the commission at the unusually low rate of 15 cents per page, please advise us promptly so that we may make enough copies to supply you without delay.

One of these circulars came to the hands of the defendant, Rockland Wholesale Grocery Co. The company answered, stating that it would "be pleased to receive a copy of the reports of the Federal Trade Commission."

Nothing was said in either the circular or the defendant's letter with reference to the number, or probable number, of pages that would be required to report the hearings.

Some time later the plaintiff forwarded to the defendant 1,700 pages of testimony, being the first installment of data originating in a hearing before the commission.

The defendant immediately returned these pages, notifying the plaintiff that it “did not order anything of the kind.” In its letter it stated: “We supposed we were getting a pamphlet for a few dollars’ cost; we did not know we were ordering anything of this nature.”

The plaintiff then sent to the defendant a statement in the following form:

Official Reporters-
Federal Trade Commission.

September 16, 1921.
Unfair Competitive Methods in the Wholesale Grocery Trade.
Before the Federal Trade Commission.

No. 579. Rockland Wholesale Grocery Co., Rockland, Maine, to Hulse & Allen, Dr.

17 East 36th Street, New York. The rate of 15 cents per page has been fixed by agreement with the Federal Trade Commission.

It is frequently not recognized by our clients that bills rendered by us are not subject to credit terms, but are for services requiring immediate and often advance payment by us, and for which we in consequence should be promptly reimbursed. We therefore anticipate the earliest possible attention to your indebtedness.

For official stenographer's transcript of proceedings before the Federal Trade Commission:

Pages 1 to 1,066, 1 copy, 1,666 nages at 15 cents
Exhibits 1 to 34, 1 copy,

34 pages at 15 cents

1,700.. Int.

255.00 10.25

265.25

And, upon the defendant's refusal to pay for the testimony, the plaintiff brought this action for $265.25. The plaintiff contended that there was a complete contract made betwee. the parties which the defendant could not evade. The defendant contecord that there was no contract because there was no “meeting of the mids” upon the subject. The court held that the defendant's contention was correct, saying:

An examination of the circular and letter in reply without any other evidence discloses that the minds of the parties did not meet. The plaintiff offered a “complete official report” and sent a partial report of the evidence. The defendant says he expected a complete report, something in the nature of a pamphlet, and refused to receive a partial report of the evidence, unbound.

The wording of the circular as to the offer and the reply shows clearly a misunderstanding, and the further correspondence between the parties fortifies the conclusion that, however well intentioned, their minds did not meet.

Judgment was accordingly given in favor of the defendant.

Folio" Means 100 Words If the language used in an agreement for the sale of property or services has an established meaning, or unmistakably identifies certain property, there will be a binding contract, although one of the parties understood the language to mean something different from its real meaning.

A recent decision applying this rule is Law Reporting Co. v. Whitaker, St. Louis, Mo., Court of Appeals, 254 S. W. Rep. 715. This case also involves the sale of a report of proceedings. But because of the somewhat different language used by the parties the case was decided differently. The purchaser was held liable.

The plaintiff, Law Reporting Co., was employed as official reporter to report the proceedings of the Federal Electric Railways Commission. This commission was appointed by the President of the United States to investigate the financial situation of the electric railways of the country and make recommendations for their relief.

After having been employed, the plaintiff sent out a circular letter to electric railway associations and members of the Investment Bankers' Association. One of these letters was addressed to and received by the defendants.

The letter offered "to furnish promptly copies of the official reports of the commission's proceedings at the rate of ten cents per

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