Story Case

The Southern Construction Company acquired a contract to do certain street paving in the town of Memphis, Tennessee. Therefor the Illinois Paving Brick Company sent the construction company a printed offer stating terms upon which brick would be furnished for this work. The terms were agreeable to the Construction Company and it returned the document properly signed to the brick company. This company did not send any signed contract to the construction company, but immediately prepared to deliver brick.

A car was loaded and a bill of lading for the car was forwarded by the railroad company to the construction company. The latter refused to take the bill of lading and telegraphed to the brick company that negotiations were at an end, since it had never signed any contract or sent any acceptance to the construction company. The brick company started a law suit for damages on a breach of a written contract. Can it recover?

Ruling Court Case. Pekoe Vs. Vogel, Volume 157 Illinois Reports, Page 339; Volume 30 Lawyer's Reports Annotated, Page 491

Pekoe was a cooper employed by Vogel, the defendant, to do certain work for him. The terms of their agreement were made in writing. One term of the contract was that Pekoe should not be permitted to leave the employment of Vogel without first giving ten days' notice of his intention.

Pekoe entered upon the performance of the duties under the agreement. Vogel accepted the work which he did and made compensation to him in accordance with the terms of their agreement. After Pekoe had worked a while for Vogel, he left without giving any notice whatsoever. He demanded of Vogel the amount of compensation due him at the time he left. This Vogel refused to give, because Pekoe had broken his agreement. Pekoe then sued for the recovery of this amount. Vogel contended, in defense, that he could not recover because their agreement provided, in case he should leave without giving the notice, that Vogel might retain twenty-five dollars as damages. Pekoe, in answer to this, said that the agreement was not binding, because it was signed by him only, and that Vogel had never signed it.

Decision

When parties enter into a written agreement, which they intend to sign, if one of the parties thereto, who does not sign, treats the contract as in existence and acts upon the same, it becomes a binding contract. Although it was signed by Pekoe, but not by Vogel, the latter had recognized the existence of the contract by accepting and paying for the work done by Pekoe. His acceptance and recognition of this contract, although unsigned by him, was equivalent to a formal execution thereof.

It was therefore decided that the contract was none the less binding upon Pekoe because it was unsigned by Vogel.

Ruling Law. Story Case Answer

When the parties have agreed to reduce their agreement to writing, and contemplate that it shall be signed by both, if one signs and the other begins to act under the contract, it is a written contract, even though he may not have signed the same. His conduct, and his recognition of the existence of the binding force of the contract, is regarded as equivalent to his signature thereto. In the Story Case, the brick company can recover on the breach of a written contract with the construction company. Had the construction company stipulated that the brick company should send a signed contract, the agreement would not have been perfected until that was done. As the case stands, a contract existed, based on the document signed and returned by the construction company.