The legal enforcement of a binding contract requires consideration to both bargaining parties, and so on this occasion, the demands of an established labour force prove their undoing when overlooking the fundamental principles of any written agreement.
In 1900, a commercial fishing enterprise recruited the services of a number of seamen and deck hands for the purposes of catching salmon. Before departing San Francisco, the now appellants accepted and signed individual employment contracts, on grounds that they would be paid between $50-$60 per person, with two additional cents for every salmon caught.
After docking in Alaska a month later, the men ceased working and demanded that the ship’s superintendent pay them $100 each, or risk losing them entirely. With no means with which to replace them, and after failing to placate their objections, the superintendent agreed to pay the increased sums; after which, duplicate contracts were printed and signed before the local Shipping Commissioner, despite the superintendent stressing that he was unauthorised to endorse the new contracts.
Upon return to San Francisco, the appellants demanded their increased payments; however, the respondent employers refused to acknowledge anything other than the original contract; and so, litigation was bought against them on grounds that the fishing nets supplied were defective and therefore counter to their chances of earning extra money, as per the original agreement.
The Northern California District Court took issue with the principles of the appellants claims, as to provide defective nets would by effect, have reduced the employers profits and subsequent means of operation, therefore it was held that refusal to perform the contract was unlawful; however, the court also held that:
“Under such circumstances, it would be strange, indeed, if the law would not permit the defendant to waive the damages caused by the libelants’ breach, and enter into the contract sued upon, a contract mutually beneficial to all the parties thereto, in that it gave to the libelants reasonable compensation for their labor, and enabled the defendant to employ to advantage the large capital it had invested in its canning and fishing plant.”
At which point, judgment was made in favour of the appellants, despite glaring disparities of fact.
Upon further challenge, the court of appeals drew reference to the statements made by the superintendent, and noted that any contract entered into under duress and without due consideration was, without question, unenforceable, as had been outlined in King v. Railway Co. where the court ruled that:
“No astute reasoning can change the plain fact that the party who refuses to perform, and thereby coerces a promise from the other party to the contract to pay him an increased compensation for doing that which he is legally bound to do, takes an unjustifiable advantage of the necessities of the other party.”King v. Railway Co.
And so therefore:
“There can be no consideration for the promise of the other party, and there is no warrant for inferring that the parties have voluntarily rescinded or modified their contract. The promise cannot be legally enforced, although the other party has completed his contract in reliance upon it.”King v. Railway Co.
Thus, it was for this simple and perhaps obvious reason, that the appeal was dismissed and judgment reversed back in favour of the respondents.