ContractsProf Blog

Today in history: April 26

On this date in 1607, English employees of the privately held Virginia Company of London (left: the company seal) land at Cape Henry, Virginia, with the intent of founding a gold-mining operation. A month later they will found the first successful settlement of Jamestown.

They don't actually find any gold, but the settlement will endure, making the United States the first nation in history to be founded by a for-profit corporation.

[Frank Snyder]

Today in history: April 25

On this date in 1938, the United States Supreme Court shocked just about everyone with the release of Erie Railroad v. Tompkins, a decision that wiped nearly 100 years of federal common law off the books and became a permanent fixture of the U.S. civil procedure casebook.

Why mention it on a blog related to contract law?  Because the lawyer who lost the case (and who saw his law firm go out of business with the loss of the contingent fee) was 24-year-old Aaron L. Danzig, who had graduated from law school only two years earlier.  He's best known in contract law circles as the father of future Stanford Contracts tprof (and, later, my partner at Latham & Watkins partner and Secretary of the Navy) Richard Danzig, author of The Capability Problem in Contract Law.

[Frank Snyder]

Today in history: April 24

On this date in 1957, the Suez Canal reopens for business after its extended closure during the Suez Crisis.  Egyptian President Gamal Nasser had responded to an Anglo-French seizure of the canal by sinking all 40 ships in it.  The canal couldn't be reopened until they were cleared, and much shipping was delayed or routed around the Cape of Good Hope.

The case, of course, let to some of the most famous "impracticability" and "frustration of purpose" decisions in modern contract law, including Lord Denning's influential opinion in Ocean Tramp Tankers Corporation v V/O Sovfracht (The Eugenia), [1964] 2 Q.B. 226 (CA), in which the Court of Appeal held that the closure of the canal as a result of military action was not an event that excused performance under the shipping contract.

[Frank Snyder]

Today in history: April 23

On this date in 1791, lawyer and politician James Buchanan was born in a log cabin in Mercersburg, Pennsylvania.  Buchanan went on to become one of the most experienced men ever to hold the office of President of the United States, having served as state legislator, Congressman, Senator, minister to Russia, minister to Great Britain, and Secretary of State -- as well as turning down a seat on the U.S. Supreme Court.

He was also a very bad prophet who wildly overestimated the power of the U.S. Supreme Court to decide contentious political issues.  In his Inaugural Address he cheerfully noted that the question of slavery was one of "little practical importance" because the U.S. Supreme Court was about to settle it as a matter of Constitutional law.  Two days later, the Court announced Dred Scott v. Sandford.  Two years later, in his 1859 State of the Union message, he was still confident that the Court's decision had finally settled the issue whether slavery could be abolished and eliminated all need for sectional strife:

I cordially congratulate you [the people] upon the final settlement by the Supreme Court of the United States of the question of slavery in the Territories, which had presented an aspect so truly formidable at the commencement of my Administration. The right has been established of every citizen to take his property of any kind, including slaves, into the common Territories belonging equally to all the States of the [Union], and to have it protected there under the Federal Constitution. Neither Congress nor a Territorial legislature nor any human power has any authority to annul or impair this vested right. The supreme judicial tribunal of the country, which is a coordinate branch of the Government, has sanctioned and affirmed these principles of constitutional law . . . .

Apparently, though, some people continued to disagree.

[Frank Snyder]

Today in history: April 22

On this date in 1864, the United States Congress passes the Coinage Act.  It authorizes the creation of a new 2-cent coin (left), on which Secretary of the Treasury Salmon P. Chase decides to put the words "In God We Trust."  That's the first use of that motto on a U.S. coin.

No one at the time can possibly suspect that this will go on to become the motto of the United States, far outlasting the coin that introduced it.

[Frank Snyder]

Today in history: April 20

On this date in 1871, Congress passes the Civil Rights Act of 1871 at the urging of President U.S. Grant.  The measure, originally aimed at suppressing the Ku Klux Klan in the South, will eventually come to be codified as one of the most important civil rights laws, as 42 U.S.C. § 1983.

[Frank Snyder]

Today in history: April 19

On this date in 1782, the Republic of the Seven United Netherlands becomes the first nation to recognize the independence of the United States.   This is historically important because it marked the United States' first entry onto the world stage, a process that would culminate two centuries later with atification of the United Nations Convention on Contracts for the International Sale of Goods.

[Frank Snyder]

Today in history: April 18

On this date in 1923, Babe Ruth hits a home run and the New York Yankees beat Boston 4-1 in the first game ever played at the new Yankee Stadium.  The team''s owners built the stadium with their own money on land they bought and paid for themselves.  And they paid taxes on the property after they built it.

Yes, times have changed.

[Frank Snyder\

Today in history: April 17

On this date in 1492, one of the most important contracts in history is signed, as Queen Isabella I of Castile and León inks a deal with a Genoese sailor, Christopher Columbus, to sail westward to the Orient in search of spices.

Columbus subsequently sets sail with three ships, but it turns out that both parties are laboring under a mutual mistake of fact.

[Frank Snyder]

Today in history: April 16

On this date in 1905, steel tycoon Andrew Carnegie (left) donated $10 million to create the eponymous Carnegie Foundation for the Advancement of Teaching.  It's not really clear whether it helped.  A hundred and four years later, American law schools are still teaching the same way they were in 1905. 

["Mr. Hart?" he droned, "Can you tell us the facts of Paradine v. Jane?"]

[Frank Snyder]

Today in history

On this date, April 15, 1912, the luxury liner R.M.S. Titanic slips below the icy North Atlantic waves off the Newfoundland coast.  

Contracts types remember the event because Sir Cosmo Duff Gordon’s quick thinking in getting himself and his wife Lucy (left) into a lifeboat will ultimately lead to the seminal decision in Wood v. Lucy, Lady Duff Gordon.

[Frank Snyder]

Today in history

On this date, April 14, 1828, lexicographer Noah Webster publishes the first edition of his American Dictionary of the English Language, a major landmark in the question to get Americans to use straightforward, proper English.

Lawyers immediately decide to ignore the new development.

[Frank Snyder]

Fifty Years Ago

Fifty years ago reading. THE UNIFORM COMMERCIAL CODE AND CONTRACT LAW: SOME SELECTED PROBLEMS, 105 U. Pa. L. Rev. 836 (1957). This is an interesting and long article on Article 2. If you are wondering about the changes to Article 1 and Article 2 and the adoption of the changes by the states, it is worth remembering that in 1957, six years after Article 2 was approved, only one state, Pennsylvania, had adopted it.

Stephen Safranek

Today in History: Sherwood Buys a Cow

Exactly 120 years ago today, May 15, 1886, at Walkerville (now part of Windsor), Ontario, distiller and cattle breeder Hiram ("Canadian Club") Walker and banker Theodore C. Sherwood struck a deal over a polled Angus cow named Rose.  Walker agreed to sell the cow, which he thought barren, for $80.  When she turned out to be with calf (and therefore worth as much as $1,000), Walker reneged, leading to the most famous "mutual mistake" case in U.S. history, Sherwood v. Walker.  In honor of the day, this lyric, to the tune of Bob Dylan's Just Like a Woman.

JUST LIKE A HEIFER
Now Sherwood needed a cow.
It's not clear if for breeding, or for chow.
He went to Walker's farm,
Thought there would be no harm --
But there he fell under Rose's fatal charm
And he knew --
She's the one.

CHORUS
She moos, just like a heifer (Yes she does)
And she chews grass just like a heifer (Yes she does)
And she woos bulls just like a heifer --
But she's priced just like a side of beef.

Now Sherwood offered to buy.
Old Walker pulled out a jug of rye.
Sherwood thought, "It's her I need!"
Walker thought, "She cannot breed."
The two men haggled and at last agreed
On a price --
For that Rose.

[CHORUS]

BRIDGE
Sherwood went to get his cow,
Walker said, "Ah, now,
I won't let her go!
Eighty bucks?  Don't make me laugh!
This cow is now with calf!
And I tell you here,
She's now too dear!
Let me make it clear -- that

I just won't sell.
And Sherwood, you can go to hell!
The contract I will break,
Advantage I will take
Of the doctrine known as ‘mutual mistake,'
And you -- you're just screwed."

[CHORUS]

[Frank Snyder]

Today in History: Sorry, No Harrier Jet

Exactly ten years ago, on this date, May 7, 2006, the Pepsi Cola Company refused to deliver a Harrier jet aircraft to John D. R. Leonard, who had sent in a check for $700,000 for 7 million “Pepsi Points” and demanded the jet.  Leonard would subsequently sue, leading to one of the most famous contract law decisions of the last decade, Leonard v. Pepsico.

Pepsi had run a television commercial as part of its “Pepsi Stuff” marketing campaign, showing a schoolboy arriving at school in his own Harrier AV-8B VTOL (Vertical Take Off and Landing) fighter jet, with the tag line, “Harrier Fighter 7,000,000 Pepsi Points.”  The Harrier jet was presumably chosen because Arnold Schwarzenegger had flown one to destroy the bad guys in the 1994 hit True Lies.  The $700,000 would have been a bargain, since according to the Internet Movie Database, the producers of True Lies had paid the Marine Corps more than $100,000 -- $2,410 an hour -- just to rent Harriers for the film.

The Pepsi Stuff campaign, by the way, extremely effective, being named Promo Magazine in 2002 as one of the “Ageless Wonders” of advertising, right up there with the prizes in Cracker Jack boxes.  Leonard's suit probably didn't hurt.

[Frank Snyder]

Today in History: Katie Gets a Present

On this date, May 1, 1891, John C. Ricketts signs a $2,000 promissory note in favor of his niece Katie Scothorn.  He goes to the Mayer Bros. Clothing Co. in Lincoln, Nebraska.  (Left: Contemporary post card image.)  A witness describes what happens:

     A.  Well the old gentleman came in there one morning about 9 o’clock, -- probably a little before or a little after, but early in the morning, -- and he unbuttoned his vest and took out a piece of paper in the shape of a note; that is the way it looked to me; and he says to Miss Scothorn, “I have fixed out something that you have not got to work any more.” He says, “None of my grandchildren work and you don’t have to.”
     Q. Where was she?
     A. She took the piece of paper and kissed him; and kissed the old gentleman and commenced to cry.

Katie proceeds to quit, and when the old gentleman dies without delivering the cash, executor Andrew D. Ricketts (the old man's son) refuses to pay the note.  Katie sues.  The decision, Ricketts v. Scothorn -- allowing her to recover in contract for what would then have been considered a failed gift -- is one of the staples of promissory estoppel.

For those interested, a biography of Andrew is here.  There is some question about how much $2,000 in 1891 would be worth today.  Using the unskilled wage -- probably the best measure given that it was supposed to replace Katie's earnings as a bookkeeper -- that $2,000 would be worth about $220,000.

[Frank Snyder]

Today in History: Crunden-Martin Asks for a Quote

On this date, April 20, 1895, the Crunden-Martin Wooden Ware Co. of St. Louis, Missouri (left), sends the following message to to the Fairmount Glass Works of Fairmount, Indiana:

Gentlemen:
Please advise us the lowest price you can make us on our order for ten car loads of Mason green jars, complete, with caps, packed one dozen in case, either delivered here, or f. o. b. cars your place, as you prefer. State terms and cash discount.
Very truly,
Crunden-Martin W. W. Co.

Fairmount's reply, couched as a price quote, will nevertheless be found by the Kentucky Court of Appeals (how did Kentucky get involved in this?) to be an offer.  The case of Crunden-Martin Wooden Ware Co. v. Fairmount Glass Works is a casebook staple.  The Crunden-Martin facility is a proposed National Historic Site -- you can see lots of pictures here.  The "F" in a hexagon (above, right) was the Fairmount trademark.  You can click on "continue reading" for the text of the decision.

[Frank Snyder]

       Fairmount Glass Works v. Crunden-Martin Wooden Ware Co.
                                Court of Appeals of Kentucky
                                  106 Ky. 659; 51 S.W. 196

                                    May 24, 1899, Decided

HOBSON, J.

On April 20, 1895, appellee wrote appellant the following letter:

“St. Louis, Mo., April 20, 1895. Gentlemen: Please advise us the lowest price you can make us on our order for ten car loads of Mason green jars, complete, with caps, packed one dozen in case, either delivered here, or f. o. b. cars your place, as you prefer. State terms and cash discount. Very truly, Crunden-Martin W. W. Co.”

To this letter appellant answered as follows:

“Fairmount, Ind., April 23, 1895. Crunden-Martin Wooden Ware Co., St. Louis, Mo. -- Gentlemen: Replying to your favor of April 20th, we quote you Mason fruit jars, complete, in one-dozen boxes, delivered in East St. Louis, Ill.: Pints, $ 4.50; quarts, $ 5.00; half gallons, $ 6.50 per gross, for immediate acceptance, and shipment not later than May 15, 1895;  sixty days’ acceptance, or 2 off, cash in ten days. Yours truly, Fairmount Glass Works.

“Please note that we make all quotations and contracts subject to the contingencies of agencies or transportation, delays or accidents beyond our control.”

For reply thereto, appellee sent the following telegram on April 24, 1895:

“Fairmount Glass Works, Fairmount, Ind.: Your letter twenty-third received. Enter order ten car loads as per your quotation. Specifications mailed. Crunden-Martin W. W. Co.”

In response to this telegram, appellant sent the following:

“Fairmount, Ind., April 24, 1895. Crunden-Martin W. W. Co., St. Louis, Mo.: Impossible to book your order. Output all sold. See letter.  Fairmount Glass Works.”

Appellee insists that, by its telegram sent in answer to the letter of April 23d, the contract was closed for the purchase of ten car loads of Mason fruit jars.  Appellant insists that the contract was not closed by this telegram, and that it had the right to decline to fill the order at the time it sent its telegram of April 24th.  This is the chief question in the case.  The court below gave judgment in favor of appellee, and appellant has appealed, earnestly insisting that the judgment is erroneous.

We are referred to a number of authorities holding that a quotation of prices is not an offer to sell, in the sense that a completed contract will arise out of the giving of an order for merchandise in accordance with the proposed terms.  There are a number of cases holding that the transaction is not completed until the order so made is accepted. 7 Am. & Eng. Enc. Law (2d Ed.), p. 138; Smith v. Gowdy, 8 Allen 566; Beaupre v. P. & N. A. Telegraph Co., 21 Minn. 155.

But each case must turn largely upon the language there used.  In this case we think there was more than a quotation of prices, although appellant’s letter uses the word “quote” in stating the  prices given. The true meaning of the correspondence must be determined by reading it as a  whole.  Appellee’s letter of April 20th, which began the transaction, did not ask for a quotation of prices.  It reads: “Please advise us the lowest price you can make us on our order for ten car loads of Mason green jars. . . . State terms and cash discount.”  From this appellant could not fail to understand that appellee wanted to know at what price it would sell it ten car loads of these jars; so when, in answer, it wrote: “We quote you Mason fruit jars . . . pints $ 4.50, quarts $ 5.00, half gallons $ 6.50 per gross, for immediate acceptance; . . . 2 off, cash in ten days,” -- it must be deemed as intending to give appellee the information it had asked for.  We can hardly understand what was meant by the words “for immediate acceptance,” unless the latter was intended as a proposition to sell at these prices if accepted immediately.  In construing every contract, the aim of the court is to arrive at the intention of the parties.  In none of the cases to which we have been referred on behalf of appellant was there on the face of the correspondence any such expression of intention to make an offer to sell on the terms indicated.

In Fitzhugh v. Jones, 20 Va. 83, 6 Munf. 83, the use of the expression that the buyer should reply as soon as possible, in case he was disposed to accede to the terms offered, was held sufficient to show that there was a definite proposition, which was closed by the buyer’s acceptance.  The expression in appellant’s letter, “for immediate acceptance,” taken in connection with appellee’s letter, in effect, at what price it would sell it the goods, is, it seems to us, much stronger evidence of a present offer, which, when accepted immediately closed the contract.  Appellee’s letter was plainly an inquiry for the price and terms on which appellant would sell it the goods, and appellant’s answer to it was not a quotation of prices, but a definite offer to sell on the terms indicated, and could not be withdrawn after the terms had been accepted.

It will be observed that the telegram of acceptance refers to the specifications mailed.  These specifications were contained in the following letter:

“St. Louis, Mo., April 24, 1895.  Fairmount Glass Works Co., Fairmount. Ind. - - Gentlemen: We received your letter of 23d this morning, and telegraphed you in reply as follows: ‘Your letter 23d received. Enter order ten car loads as per your quotation. Specifications mailed,’ - - which we now confirm.  We have accordingly entered this contract on our books for the ten cars Mason green jars, complete, with caps and rubbers, one dozen in case, delivered to us in East St. Louis, at $ 4.50 per gross for pint, $ 5.00 for quart, $ 6.50 for one-half gallon. Terms, sixty days’ acceptance, or 2 per cent, for cash in ten days, to be shipped not later than May 15, 1895.  The jars and caps to be strictly first quality goods.  You may ship the first car to us here assorted: Five gross pint, fifty-five gross quart, forty gross one-half gallon.  Specifications for the remaining nine cars we will send later. Crunden-Martin W. W. Co.”

It is insisted for appellant that this was not an acceptance of the offer as made; that the stipulation, “The jars and caps to be strictly first-quality goods,” was not in their offer; and that, it not having been accepted as made, appellant is not bound.  But it will be observed that appellant declined to furnish the goods before it got this letter, and in the correspondence with appellee it nowhere complained of these words as an addition to the contract.  Quite a number of other letters passed, in which the refusal to deliver these goods was placed on other grounds, none of which have been sustained by the evidence.  Appellee offers proof tending to show that these words, in the trade in which parties were engaged, conveyed the same meaning as the words used in appellant’s letter, and were only a different form of expressing the same idea.  Appellant’s conduct would seem to confirm this evidence.

Appellant also insists that the contract was indefinite, because the quantity of each size of the jars was not fixed, that ten car loads is too indefinite a specification of the quantity sold, and that appellee had no right to accept the goods to be delivered on different days.

The proof shows that “ten car loads” is an expression used in the trade as equivalent to 1,000 gross, 100 gross being regarded a car load. The offer to sell the different sizes at different prices gave the purchaser the right to name the quantity of each size, and, the offer being to ship not later than May 15th, the buyer had the right to fix the time of delivery at any time before that. Sousely v. Burns’s Adm’r, 73 Ky. 87, 10 Bush 87; Williamson’s Heirs v. Johnston’s Heirs, 4 T.B. Mon. 253; Wheeler v. N. B. Railroad Co., 115 U.S. 29.

The petition, if defective, was cured by the judgment, which is fully sustained by the evidence.

Judgment affirmed.

Today in History: Nephew Gets the Money

On this date, April 14, 1891, the New York Court of Appeals decides the famous consideration case of Hamer v. Sidway, a staple of contracts casebooks.  It's the one where the uncle promises his namesake nephew $5,000 if the young man will "refrain from drinking, using tobacco, swearing, and playing cards or billiards for money until he became 21 years of age."  It doesn't sound like much of a deal today, but using the unskilled wage as a measuring stick that $5,000 in 1869 would be worth about $500,000 today.

The opinion in the case was written by Judge Alton Brooks Parker (left), who would become even more famous in 1904 when he was the Democratic candidate for President of the United States against Theodore Roosevelt.

[Frank Snyder]

Today In History: Minneapolis Surplus Rides Again

Exactly fifty years ago today, on Friday, April 13, 1956, the Great Minneapolis Surplus Store shoots itself in the foot a second time, running the following ad:

2 Brand New Pastel Mink 3-Skin Scarfs
Selling for $89.50
Out they go Saturday ... Each $1.00
1 Black Lapin Stole, Beautiful, worth $139.50 ... $1.00
First Come First Served

When the store refuses to sell the items to Morris Lefkowitz, the result will be Lefkowitz v. Great Minneapolis Surplus Store, Inc., the classic case on whether an advertisement is an "offer" in contract law.

[Frank Snyder]

Today in History: Arguing Unconscionability

On this date, April 9, 1965, the U.S. Court of Appeals for the D.C. Circuit hears oral argument in Williams v. Walker-Thomas Furniture Co., the landmark unconscionability case.  Judges David Bazelon and Skelly Wright seem amenable to the claims of the indigent plaintiff, but Judge John Danaher (the only one on the panel to have served as a legislator himself) is dubious, noting it's the legislature's job to make such calls.

The 2-1 decision, adopting unconscionability as part of the common law of the District of Columbia, will come down in August.

[Frank Snyder]