You are on page 1of 2

Case: Industrial America, Inc. v Fulton Industries, Inc.

(Delware, 1971) pp305-


309

Facts: There was a contract between Industrial America’s agent and Bush Hog,
Inc. for the agent to find a merger partner for Bush Hog. At some point, the agent
discovered an ad placed by Fulton Industries stating that Fulton was looking to
acquire a firm that matched Bush Hog’s description, and the bottom of the ad said,
“Brokers full protected.” The Industrial broker called up Fulton’s president and
said I think I have a firm for you, just like the company you mentioned in your
ad. After several discussions, the broker told Fulton the name of the company—Bush
Hog. Then, Fulton and Hogbush tried to merge without Industrial’s involvement.
Fulton said Industrial was already under a contract to find a company for Bush
Hog, and Industrial’s actions with Fulton were encompassed in the activities for
Bush Hog, so therefore, there wasn’t a new contract between Industrial and Fulton.
Essentially, Fulton argued that there wasn’t a contract between Industrial and
Fulton. because Industrial already had a contractual agreement to find a company

Issue: Does Industrial have the burden of proving the agent’s subjective intent
to accept Fulton’s offer of guaranty in the advertisement? - No.

Holding: The supreme court held that plaintiff was also entitled to judgment
against defendant holding company because the trial court erred in submitting the
issue of subjective reliance to the jury.

Reasoning: overt manifestation of assent—not subjective intent—controls the


formation of a contract. Restatement § 20: The intention to accept is unimportant
except as manifested
· In contracts, you can have multiple reasons for doing the action; acceptance of
a contract just has to be one of these reasons, however small
· In contracts, the test for reason for action is not a subjective test; no one
has to look and see whether the contract is exactly why a party chose to perform.
This is an objective test.

RULE:
· Objective intent is all that is required for the formation of a contract
· You can have mixed motivations for the act that constitutes acceptance
· You have to have actual knowledge of the offer. If you didn’t have actual
knowledge of the offer there is no way that the court will say you accepted the
offer

Notes

You do not need intent to accept.


What is the offer to the broker? - that they're fully protected

Unilateral contract - you have to have knowledge of the contract (Glover)


Complete performance can be an acceptance (Carbolic)
Need not show subjective intent is a motivating factor in contract formation
(Industrial)
If subjective intent is not relevant, they needed to show that they would have
performed anyway.
Essentially, he has performed completely both times.
In order for fulton to not have to pay commission, they would have had to shown
that industrial would have acted anyway (because they were soliciting these ppl
for a long time). He wouldn’t have done this without invitation. Subjective
intent is not thriving here.
We have a unilateral contract, he had knowledge of the offer, there was full
performance - the reason to do it is immaterial.

Unilateral contract:
· No notice required unless specifically asked for
· Acceptance by performance
· Knowledge of the offer
· Subjective intent doesn’t matter

Option contract (like mini contract) -under common law, it is a contract. There is
a consideration given in order to keep an option open. Offer cannot be revoked.
Offer is to stay open for a particular amount of time. Offeree not bound to
accept.
UCC - Firm Offers 2-205