Story Case

As Wright Shannon walked along the street one day in December, some practical joker knocked off his hat with a snowball. Shannon became very angry, but when he learned that it had been done by the son of a neighbor, he decided to frighten the boy thoroughly. He went to the neighbor's house, and signing to the father of his purpose, said in the boy's presence:

"Some one knocked my hat off with a snow ball this morning. I offer $15 for the name of the person, for I want to put him in jail".

Mr. New, the boy's father did not take the offer in the spirit in which it was given, but said to Shannon, "I accept your offer. My son, James New, threw that snowball. Please pay the fifteen dollars."Shannon refused to pay anything and New brought suit to recover. What will the court do?

Ruling Court Case. Keller Vs. Holderman, Volume 11 Michigan Reports, Page 248; Volume 83 American Decisions, Page 737

Keller and Holderman were jesting with each other one day, and Holderman offered to Keller $300 for a watch owned by the latter. He never really intended to buy the watch, for it was worth only about $15. Keller understood that it was only a joke and treated the offer as such. However, he agreed to sell the watch for that price, and gave it over to Holderman. Holderman wrote out a note promising to pay to Keller or order the sum of $300. Several months passed, and no more was said about the transaction. Then Keller presented the note and demanded payment. Holderman refused to pay it. Thereupon, Keller sued him on the note.

Holderman contended that he was not liable upon the note because he had made the offer in a jesting manner, and there was never any intention on his part to enter into such a contract, and that Keller knew that he was merely jesting.

Decision

In order to constitute a legally binding contract between parties, they must have the necessary contractual intention. Thus an offer made by one in jest and accepted by another, who knows that it was made in jest, does not result in a binding contract. All the circumstances of this case show that Holderman had not the least intention of giving $300 for a $15 watch and Keller, when he accepted the offer and received the note in question, knew that Holder-man was not in earnest. It follows that no contract was made.

Therefore, the Court gave judgment for the defendant, Holderman.

Ruling Law. Story Case Answer

"Where words are viewed in the light of the surrounding circumstances and in the light of the conduct of the parties, and indicate mere idle talk or jest, and are so understood by both persons, they cannot become the basis of a contract. In the Court Case of Keller-man vs. Holderman, from the circumstances, it is perfectly apparent that neither person intended to enter into such a contract as was sought to be enforced; and it is clear that both parties understood that there was no intention that a legally binding contract was to result from their jesting transaction. The same may be said of the Story Case; both parties understood that their talk was mere jest and banter; thus, no contract resulted therefrom. Consequently, Mr. New can recover nothing from Mr. Shannon.