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Law School Case Brief

Bernstein v. W. B. Mfg. Co. - 238 Mass. 589, 131 N.E. 200 (1921)

Rule:

In a bilateral agreement both of the mutual promises must be binding or neither will be, for if one of the promises is for any reason invalid the other has no consideration and so they both fall.

Facts:

Plaintiff sellers brought an action for breach of contract following the buyer’s rejection of shipment of boys’ wash suits. The buyer’s rejection arose from a clause in the written agreement written by the sellers stating that "this order is given and accepted subject to a limit of credit and determination at any time by us." They argued that the agreement was invalid for want of mutuality obligation based on the rule that in a bilateral agreement both of the mutual promises must have been binding or neither would be. The superior court denied the buyer’s request for directed verdict.

Issue:

Does the written clause in the agreement between the parties which states that the order is given and accepted subject to the determination of the sellers invalidate the contract?

Answer:

Yes.

Conclusion:

The appellate court agreed with the buyer and sustained the exceptions to the decision of the superior court that denied the buyer's request for a directed verdict in this breach of contract, holding that the right of "determination" was intended to embrace the "order" as well as "the limit of credit”.

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