May 19, 1917 



HOKTI CULTURE 



657 



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MEIRIVIAN \A/E:ISS 



WHEN BUYING GOODS BE SURE 



YOU HAVE A CONTRACT 



THAT IS A CONTRACT. 



Most business people are familiar 

 with the fundamental legal principle 

 that where a seller of merchandise 

 fails through any fault of his own to 

 deliver what he has sold, the buyer 

 can go out in the open market and buy 

 the quantity of merchandise the seller 

 should have delivered, and charge the 

 latter with any higher price he may 

 have to pay. 



To illustrate, if the contract price 

 was $1 a dozen, and the buyer, after 

 the seller's default, had to pay $1.25, 

 he could sue the seller for 25 cents a 

 dozen, this being his loss through the 

 seller's default. 



This is one of the fairest and most 

 salutary principles of law that I know 

 of, and in innumerable cases it has 

 come in very handy. The purpose of 

 this article is to emphasize the need 

 of being sure, when you buy goods by 

 written order, that you are making the 

 kind of contract under which you can 

 recover your losses in the way I have 

 described. A case has just been de- 

 cided by the highest Appeal Court of 

 Pennsylvania which shows that very 

 many of the contracts in everyday use 

 in the purchase and sale of merchan- 

 dise are not of that kind. This is a 

 Pennsylvania case, but it would be af- 

 firmed by any court in the United 

 States, and is therefore the general 

 law. 



The maker of a certain product 

 wrote the following letter to a pros- 

 pective buyer: — 



Revertine to telephone conversation with 

 our Mr. Walter J. Wilhelm, who is now 

 East, we confirm sale of 



Two tank cars of at %i.7ii per cwt. 



Terms 10 days net cash f. o. b. Pittsburgh 

 which in accordance with agreement, is 

 subject to approval of type sample drawn 

 from bull;, ivhich will be submitted im- 

 mediately upon receipt from the plant in- 

 volved. 



We highly appreciate this item of busi- 

 ness, and you may rest assured that every 

 effort -nill be made upon our part to meet 

 your entire approval at all points. 



I omit the name of the product mere- 

 ly because I do not wish the principle 



— which is of course the same, no mat- 

 ter what the product is — to be ob- 

 scured by mentioning any particular 

 product. 



The buyer answered as follows: — 



Please sliip the following goods f. o. b. 

 Pittsburgh;— 



Two tanli cars 



I'rice .ft.ii cwt. Pittsburgh. 

 The above subject to approval of sample 

 drawn from bulli when submitted. 



Now, the average business man, with 

 these letters in his possession, would 

 be apt to conclude that he had a com- 

 plete contract for the purchase of mer- 

 chandise, good enough to protect him 

 at every point. Yet the courts said it 

 was no contract at all. 



The seller here for some reason 

 failed to deliver. The buyer, believing 

 his contract to be all right, went out 

 and bought two cars of the product. He 

 had to pay more than 14.54 per cwt. 

 and he at once sued the defaulting 

 seller for the difference. The court 

 said he could not recover, because the 

 parties had never completed the mak- 

 ing of their contract. In other words, 

 they had never fixed what particular 

 grade of product was to pass, and until 

 they did that there was no contract. 

 This is the core of the decision: — 



The contract was lacking In one partic- 

 ular essential, the minds of the parties had 

 not met on the quality of the commodity, 

 as that was to be determined by sample 

 thereafter to he submitted for plaintiff's 

 approval. tJntil such approval there was 

 no completed agreement. Should plaintiff 

 disapprove the sample drawn from bulk 

 there would be no sale. There is nothing 

 reciuiring defendant to submit samples from 

 successive tank cars until two were found 

 that would meet plaintiff's approval. 



This stipulation in the letters indicates 

 that there are different grades of this prod- 

 uct, or at least that the quality thereof 

 varies, hence the contract was subject to 

 plaintiff's approval of the sample. It is 

 somewhat like an agreement for the sale 

 of lumber, subject to the buyers approval 

 of a sample thereof to be submitted. In 

 such case the approval is the act whereby 

 the parties agree upon the quality of the 

 commoditj', and until that is done it can- 



not be said that the bargain is closed. In 

 the case at bar the plaintiff never waived 

 the production of a sample and never 

 agreed to accept the product without ref- 

 erence to the quality. 



In other words, the court's position 

 was that the parties here had never 

 bought or sold any particular thing. 

 They had agreed to buy and sell, pro- 

 vided the buyer approved the sample 

 when it was submitted to him. It he 

 did not approve the sample there was 

 no sale. There would not be a com- 

 plete, enforceable contract until a sam- 

 ple had been submitted and approved. 



There is a very large number of con- 

 tracts of this type in everyday business 

 use. Contracts that make the deal, 

 but leave it subject to the buyer's ap- 

 proval of something, sucli as approval 

 of sample, or approval of opening 

 price. They are really nothing but 

 memoranda out of which, when some- 



may come a con- 



thing more is done, 

 tract. 



Take a contract for so much mer- 

 chandise, subject to approval of open- 

 ing price. Of course, if the seller 

 never names an opening price, the 

 buyer has nothing he can go on. And 

 in a sale subject to approval of sample, 

 like the case cited above, there is no 

 contract unless and until the seller 

 submits a sample. 



How could the buyer in the case 

 cited have protected himself against 

 what happened? I may not be able to 

 answer this, for I am naturally not 

 well acquainted with the customs of 

 the particular trade, but it seems rea- 

 sonably clear that he would have been 

 protected if he had declined to buy 

 on approval of a sample to be selected, 

 but had insisted on not placing any 

 order until some sample had been sub- 

 mitted, and then placing it on that. 

 That would have been a contract. 

 I Copyright. April 1017, ly Elton J. 

 Buckley.) 



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