Caseflicks

Supreme Court of Connecticut • 1922

Gurfein v. Werbelovsky

118 A. 32 | 97 Conn. 703 | 1922 Conn. LEXIS 125

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Takeaway

In short, this case holds that a cancellation clause does not destroy contractual consideration when the other party retains a meaningful opportunity to perform first and thereby make the promise binding.

Background

The parties’ alleged agreement concerned the sale of five cases of glass. In a letter accepting an earlier proposal, the defendant stated the terms of sale and added: “You have the option to cancel the above order before shipment.” The agreement required shipment within three months, but set no more specific shipping date.

The defendant argued that the buyer’s pre-shipment cancellation option made the agreement void for lack of mutuality, because the buyer could avoid any obligation to purchase. The lower court sustained a demurrer on that theory. The complaint, however, alleged that the buyer never gave notice of cancellation and repeatedly demanded performance.

Issues

Issue #1

Whether a sales contract is unenforceable for lack of mutuality or consideration when the buyer may cancel before shipment.

Holding

No. The contract was supported by consideration because the seller could ship at any time within the three-month period, and shipment before notice of cancellation would bind the buyer to accept and pay for the goods.

Reasoning

A promise coupled with an unrestricted right to cancel at will ordinarily creates no contract, because one party has made no binding commitment. But the relevant question here was not whether the bargain was sufficiently mutual for equitable specific performance; it was whether the seller’s promise rested on legal consideration. If the seller had any enforceable right to require the buyer’s performance, even briefly, that right supplied consideration.

The buyer’s option was not unlimited. By its terms, cancellation had to occur “before shipment.” Because the contract allowed shipment at any time within three months, the seller acquired an immediate right to ship when the agreement was formed. If the seller shipped before receiving notice of cancellation, the buyer’s option ended and the buyer became obligated to take and pay for the glass.

Thus, at the moment of formation, the seller had at least one clear opportunity to make the buyer’s obligation enforceable—by shipping before cancellation. The buyer could not prevent or nullify that opportunity through a cancellation notice delivered too late. That limited but real right to enforce performance was enough to create a valid contract, even if the seller’s bargain may have been commercially unwise.

The complaint also alleged that the buyer never exercised the cancellation option and instead repeatedly demanded performance. On the parties’ own contractual theory, the agreement remained enforceable by either side unless and until the buyer gave notice of cancellation before shipment. Whether the arrangement was so improvident as to support an equitable defense presented a factual question that could not be resolved on demurrer.