Story Case

Richard Bates and Howard Sherman made a contract whereby Bates agreed to build a home for Sherman within four months time. Sherman agreed to pay Bates $2,000 for the completed house. Four days after the work was started, Bates declared that he was about to discontinue the contract because he could not get brick masons to work for $4 a day as he had planned to do when he made the contract; that brick masons would cost him $5 a day and he could not afford to pay this amount. Sherman was in haste to have the house completed within the specified time, and therefore he offered to pay one-half of the extra cost of the men, provided Bates would continue under the original contract. Bates accepted this offer, and the new understanding was put in writing.

When the house was completed, Sherman paid Bates $2,000 and refused to pay any more. Bates demanded $400 additional, since his brick masons had cost him $800 more than he originally planned to pay them, and Sherman had promised to pay one-half of this extra cost. Sherman refused to pay this on the ground that there was no counterpromise from Bates to set off the promise made by himself. Therefore, a second contract did not exist, although the understanding was put in writing. Can Bates recover this additional sum in a law suit?

Ruling Court Case. Howe Vs. O'Mally, Volume 1 Murphy's North Carolina Reports, Page 287; Volume 3 American Decisions, Page 693

Howe, by a warranty deed, conveyed to O'Mally 140 acres of land. This 140 acres was a part of a much larger tract which was owned by Howe. Two years later, by another deed, Howe conveyed the remainder of the tract. The deed recited that the remaining portion of the tract contained about 221 acres. But it was stated in the conveyance that the intent of the owner was to pass title to the remainder whether it contained more or less than 221 acres. Sometime later a dispute arose between the parties as to the number of acres contained in the last tract conveyed. O'Mally contended that it contained more than 221 acres. To settle the disagreement they mutually agreed to have the land surveyed; and if it should be found to contain more than 221 acres, O'Mally agreed to pay Howe ten dollars an acre for the excess; and if it was found to contain less than 221 acres, Howe agreed to pay O'Mally ten dollars per acre for the deficiency. Upon the resurvey, the tract in question was found to contain 87 more acres than the deed called for. Howe demanded $870 of O'Mally; the latter refused to pay it and this action was brought for the recovery thereof.

It was contended by O'Mally that no recovery should be permitted because there was no consideration for his promise to pay ten dollars an acre for the excess.

Decision

Here are mutual promises; one is made the consideration of the other, and we are of opinion, that the plaintiff's promise to refund in the event of deficiency in the number of acres is a good consideration to support O'Mally's promise to pay should there be more than the number of acres named in his deed.

This was a bilateral contract. Each had promised to do a certain thing under certain circumstances. Each was bound to the other and there was an obligation on the part of each.

Therefore, it was decided that Howe might recover the amount sued for.

Ruling Law. Story Case Answer

A bilateral contract is one in which there are promises on both sides. One promise is given for another, so that there is something to be done or forborne on both sides, and both sides are under legal obligation, the one to the other. If the contract is not unilateral, that is, composed of a promise and an act done in reliance on that promise, it must be bilateral to be en-forcible. A promise without a counter promise is not enforcible.

In the Story Case, the counter promise of Bates to continue building if Sherman would pay one-half the extra cost of the men was in fact not a real promise, for he was already under obligation to do this very thing. A promise to do what one is already bound to do is not a promise. Therefore, a second contract did not exist, and Sherman need not pay one-half the extra cost.