Opinion ID: 2174200
Heading Depth: 1
Heading Rank: 2

Heading: validity of the contracts

Text: Licocci and Papp first argue the injunction was improper because it enforced invalid contracts. They contend the contracts lacked mutuality of obligation because Cardinal was not required to accept any of the orders solicited by its salesmen. Item 3 provided: No orders solicited by or on behalf of the Representative shall be binding upon the Corporation unless and until acceptance thereof by the Corporation. The Corporation may reject any orders obtained or reported by the Representative, at its sole discretion. While it is fundamental that a contract is unenforceable if it fails to obligate the parties to do anything, Davis v. Davis, (1926) 197 Ind. 386, 151 N.E. 134; Seco Chemicals Inc. v. Stewart, (1976) 169 Ind. App. 624, 349 N.E.2d 733; International Shoe Co. v. Lacy, (1944) 114 Ind. App. 641, 53 N.E.2d 636; Grimm v. Baumgart, (1951) 121 Ind. App. 626, 96 N.E.2d 915, the court necessarily will consider the entire contract and the presence of an acceptance clause alone will not invalidate it. Imel v. Travelers Indemnity Co., (1972) 152 Ind. App. 75, 281 N.E.2d 919. Licocci and Papp rely on Zeyher v. S.S. & S. Manufacturing Co. (7th Cir.1963) 319 F.2d 606. That opinion affirmed the trial court's decision that an employment contract with a provision similar to Cardinal's Item 3 was unenforceable for want of certainty and mutuality in that it created no obligation which either party can legally enforce against the other. 319 F.2d 607. That conclusion rested on its finding the contract did not bind plaintiff to secure any orders, nor to sell a minimum or maximum, of S.S. & S. products; did not provide for a reasonably certain way of determining the sales price or prices of S.S. & S. products; did not bind S.S. & S. to accept any orders submitted by plaintiff and did not provide a formula for determining when, if any, an obligation to accept an order would arise. Unlike the parties in Zeyher, Licocci and Papp obtained the exclusive right of representation in designated areas. Moreover, Cardinal Associates agreed to provide equipment, samples, literature, sales material, price lists, consumer lists and specialized training. In turn, Licocci and Papp agreed to solicit orders on a commission basis exclusively for Cardinal and to endeavor to sell a minimum of 80,000 units per year. The exclusivity agreements alone remove this case from the rationale of the Zeyher decision, which noted at 319 F.2d 608: In Wood v. Lucy, Lady Duff-Gordon, 222 N.Y. 88, 118 N.E. 214 (1917), the court implied consideration where defendant gave an exclusive agency, and unless the agent `gave his efforts, she could never get anything.' That is not true of S.S. & S. because plaintiff did not have an exclusive agency. We do not find in the case at bar the facts which in Lady Duff-Gordon impelled the court to conclude that the transaction there `was instinct with obligation.' Despite the employer's escape clause on accepting orders, we find Licocci's and Papp's contracts as a whole were instinct with obligation. In exchange for their promises to solicit orders, Licocci and Papp obtained exclusive territorial rights in handling Cardinal Associates' products and Cardinal Associates gave up the right to send any additional salesmen into their territories. See Seco Chemicals, supra . The contracts did not fail because of the mere presence of a reservation nor was a preliminary injunction improper for that reason.