CONTRACTS - CONSIDERATION - DEALERS' CONTRACTS

Defendant manufacturer, reserving the right to sell to enumerated persons, granted plaintiff dealer a franchise to sell certain of defendant's products in a defined territory. Plaintiff in turn promised to establish a place of business and develop the territory to the satisfaction of defendant. All orders received by defendant were to be subject to acceptance by defendant; defendant agreed to fill accepted orders as promptly as practicable; and plaintiff expressly released defendant from liability for loss or damage arising from failure of defendant to fill the plaintiff's orders. A clause, originally part of the agreement, allowing either party to cancel or terminate the agreement at any time, was later rescinded.

After the agreement was thus amended, defendant repudiated it. In a suit for damages for breach of contract the trial court dismissed the complaint on the ground that the agreement lacked mutuality and was too indefinite to constitute a contract. Held, judgment reversed. Defendant, having granted plaintiff an exclusive franchise, impliedly undertook not to employ any other dealer in the territory.

This was itself consideration to support plaintiff's promises. Defendant also impliedly promised to use an honest judgment in, passing upon orders submitted by plaintiff, treating them equally with other orders received and weighing all orders against available supply. Jay Dreher Corp. v. Delco Appliance Corp., (C.C.A. 2d, 1937) 93 F. (2d) 275.