Decision:There was an offer and a counteroffer. The counteroffer was the original contract thatadded the terms about the furniture. That offer extinguished the original offer, so Horan was notobligated to accept the offer and there was no contract formed because the offer by Horan was notaccepted unconditionally.Add. Case: E-Z Cash Advance v. Harris(Sup. Ct., Ark., 2001)--E-Z Cash provides loans to peoplepresenting checks that are held until next payday. Harris gave E-Z a check for $400 that it agreed tohold until payday. Rather than repay, Harris kept rolling over the loan and then could not repay. Shesued E-Z contending that the service charges it imposed were a form of interest that amounted to ahigher interest rate than allowed by state law. E-Z moved to dismiss the suit and compel arbitrationas provided in the loan agreement. The trial court refused to compel arbitration, holding that theagreement lacked mutuality and was not enforceable. E-Z appealed.Decision:Affirmed. “The essential elements of a contract include: (1) competent parties, (2) subjectmatter, (3) legal consideration, (4) mutual agreement, and (5) mutual obligations. ... under Arkansaslaw, mutuality requires that the terms of the agreement impose real liability upon both parties. Thereis no mutuality of obligation where one party used an arbitration agreement to shield itself fromlitigation, while reserving to itself the ability to pursue relief through the court system.” Theagreement gave E-Z the option to sue debtors in court, but required debtors to go to arbitration ifthey had a dispute with E-Z. That is not a mutual obligation, so the agreement is not valid andenforceable.Add. Case: Smith v. Hammons(Ct. App., Missouri, 2002)--Smith sued Hammons for breach of averbal contract in which Hammons agreed to hire Smith for two years at $150,000 per year, plus
10-6 Part 2: Elements of Traditional Business Lawliving space, a share of profits, and an assistant, to develop a magic show for Hammons. Thetransaction did not occur and Smith sued to recover in quantum meruit for providing valuableexpertise in the entertainment business to Hammons. Hammons contended there were onlynegotiations, not a contract. The jury found for the defendant; Smith appealed.Decision:Affirmed. “It is hornbook law that the existence of an enforceable contact is dependentupon agreement of the parties, or meeting of the minds, upon the terms of that contract.” There werematerial terms to the agreement that were not settled, so there was no meeting of the minds. Smithasserted he was due $500,000 as a share of the profits of Hammons’ enterprise, yet admitted thatthey had not agreed upon the share of profits Smith would receive. That is a material term that hadto be agreed upon for there to be a contract. There were negotiations over specific terms, but nofinal agreement, so there can be no breach of contract.