Law School Case Brief
Pick Kwik Food Stores v. Tenser - 407 So. 2d 216 (Fla. Dist. Ct. App. 1981)
A bilateral contract terminable at the will of one party is not binding, and may be terminated by either party without liability for payment of damages representing lost profits anticipated by the other. This rule is sometimes expressed as the requirement that there must be mutuality of obligation with respect to contracts to be performed in the future. A binding contract requires consideration. In a bilateral contract, the promise of one party constitutes the sole consideration for the promise of the other. If one party has the unrestricted right to terminate the contract at any time, that party makes no promise at all and there is not sufficient consideration for the promise of the other.
A convenient store ("Store") leased premises on which it operated a store and a gasoline station. The Store entered into a contract with a gasoline supplier ("Supplier") whereby the Supplier would sell gasoline on the Store's premises and would install the required equipment used to dispense the gas. The Store would collect the money from the gas sales and the parties would split the net profits equally. Several years later, defendant Pick Kwik Food Stores, Inc. ("Pick Kwik") acquired the Store's leasehold. Similarly, James H. Tenser later acquired the rights of the Supplier under the contract. Tenser continued to operate the retail gas business at that location until Pick Kwik informed Tenser that it did not consider itself bound by the contract and terminated its relationship with Tenser. Tenser filed an action for breach of contract against Pick Kwik in Florida state court. The trial judge ruled as a matter of law that Pick Kwik was bound by the contract and guilty of breaching it, and a jury awarded Tenser $ 100,000 in damages for the breach. Pick Kwik appealed.
Was Pick Kwick bound to comply with the non-termination provision of the contract even if the other party was given the right to terminate the agreement?
The court reversed the trial court's judgment and remanded the case with directions to enter judgment for Pick Kwik. The court ruled that the original contract was void because there was no mutuality of obligation in the bilateral contract as required by law. Considering that Tenser could terminate, but Pick Kwik could not without incurring damages, there was failure in consideration.
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