De Los Santos v. Great Western Sugar Company
348 N.W.2d 842 (1984)
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Rule of Law:
A contract for services that does not specify a quantity and leaves the determination of the amount of services entirely to the discretion of one party is unenforceable for lack of mutuality of obligation as to its unexecuted portions.
Facts:
- In October 1980, the plaintiff, an independent trucker, executed a 'Hauling Contract' with the defendant company to transport beets.
- The contract stated the plaintiff would transport 'such tonnage of beets as may be loaded by the Company' for a term from October 1, 1980, to February 15, 1981.
- The plaintiff knew the defendant had identical contracts with other truckers and that he would not be hauling all the company's beets.
- The plaintiff's compensation was based solely on the amount of beets he transported, at a rate per ton that varied with haul length.
- After the plaintiff had been performing under the contract for approximately two months, the defendant informed him in early December 1980 that his services were no longer needed.
- The defendant paid the plaintiff in full for all beets that he had actually hauled.
Procedural Posture:
- The plaintiff sued the defendant in trial court for breach of contract.
- The defendant, in its amended answer, alleged it had no obligation to allow the plaintiff to haul any particular amount of tonnage.
- The trial court granted summary judgment in favor of the defendant.
- The plaintiff (appellant) appealed the trial court's entry of summary judgment to this court.
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Issue:
Does a hauling contract create an enforceable obligation where it provides that a contractor shall transport 'such tonnage... as may be loaded by the Company,' giving the company sole discretion over the quantity of work?
Opinions:
Majority - Cambridge, D.J.
No. A contract that depends entirely on the wish, will, or pleasure of one party regarding the quantity of performance is unenforceable. Because the defendant company made no promise to load any specific quantity of beets, the agreement lacked mutuality of obligation and was not an enforceable contract for future services. The language 'such tonnage of beets as may be loaded by the Company' gave the defendant the unilateral right to determine its own performance, rendering its promise illusory. While the plaintiff was bound to be available, the defendant was not bound to provide any beets for hauling. This lack of mutual obligation means the defendant had the right to terminate the relationship at any time without liability for unexecuted portions of the agreement. The plaintiff's claims based on course of dealing, promissory estoppel, and the duty of good faith also fail because they are all predicated on a promise that was never made by the defendant.
Analysis:
This decision reaffirms the fundamental contract principle of mutuality of obligation, illustrating how an 'illusory promise' can render a contract unenforceable. The court clarifies that specifying a contract term (duration) and a payment rate cannot cure the absence of a definite quantity term when one party retains complete discretion over performance. This case distinguishes such agreements from enforceable requirements or output contracts, where obligations are tied to a party's actual needs or production. The ruling serves as a precedent against implying 'reasonable' quantity terms where contract language explicitly grants one party unilateral control, thereby making the promise illusory.
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