Opinion ID: 1870807
Heading Depth: 3
Heading Rank: 2

Heading: Nitro

Text: The one point on which this Court disagrees with the trial court is its ruling that Nitro is not bound to arbitrate under the Pro Net agreement. It is undisputed that on the Pro Net application Stewart submitted, in the line provided for Member Name, Stewart plainly wrote Ken Stewart/Nitro Distributing. He then signed the application with his name, Ken Stewart, and in the line below that provided for Title, he wrote president  Nitro Distrib. He also included Nitro's Federal Tax Identification Number rather than his own. By executing the Pro Net application in this unequivocal way, Stewart, Nitro's president, bound Nitro to the Pro Net agreement. This is so because of the long-held precedent that the president of a corporation may, without any special authority from its board of directors, perform all acts of an ordinary nature which by usage or necessity are incident to his office, and may bind the corporation by contracts in matters arising in the usual course of business. Gaar v. Gaar's Inc., 994 S.W.2d 612, 619 (Mo.App. 1999) (citing Sparks v. Despatch Transfer Co., 104 Mo. 531, 15 S.W. 417, 419 (1891)). Nitro claims, however, that the contract should be rescinded or reformed on the basis of Stewart's unilateral mistake in believing that BSM businesses like Nitro were eligible for Pro Net membership when, in fact, under the Pro Net bylaws, only Amway distributorships were eligible for membership. According to Nitro, the unilateral mistake prevented a meeting of the minds on the essential terms of the contract. Rescission on the basis of unilateral mistake, however, is warranted only in exceptional circumstances. Under the RESTATEMENT (SECOND) OF CONTRACTS, sec. 153 (1981): Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake.... (Emphasis added). In this case, the mistake clearly inured to the benefit of Nitro; it was not adverse to Nitro. Although Nitro was technically ineligible for membership, Pro Net in fact accepted Nitro's membership application and presumably afforded Nitro the benefits of membership nonetheless. Although the nature and extent of benefits afforded by Pro Net membership and the extent to which Nitro availed itself of those benefits (if at all) is a hotly contested issue, the critical point is that membership in Pro Net, whatever its worth, was not something adverse to Nitro. In denying relief to Nitro, this Court emphasizes that rescission is, after all, an equitable remedy, and that the unilateral mistake doctrine balances the equities by ensuring that the party seeking rescission cannot avoid its obligations under the contract where, as here, the mistake caused it no harm. This reasoning holds true for the remedy of reformation as well, and Nitro offers no independent legal argument in support of the remedy. Alternatively, though, Nitro contends that even if it is to be considered a member of Pro Net, it should be classified under the Pro Net bylaws as a founding member, rather than a regular member, and that the arbitration provision was intended to apply only to those applying for regular membership. Although the bylaws do set out the classification of members as founding and regular, and Stewart considered himself to be a founding member, the membership application he signed on Nitro's behalf stated unambiguously that the applicants were required to abide by the Pro Net Terms and Conditions, which included the arbitration provision. It is the most basic principle of contract law that parties are bound by the terms of the contracts they sign and courts will enforce contracts according to their plain meaning, unless induced by fraud, duress, or undue influence. Utility Service and Maintenance, Inc. v. Noranda Aluminum, Inc., 163 S.W.3d 910, 913 (Mo. banc 2005). Ultimately, Nitro fails to identify any legal theory to overcome the binding effect of Stewart's signature.