– Plaintiff Black (manufacturer of drills – purchaser of subcontract work from other suppliers) is dealing with Hoover – subcontracts.
– March 22, 1951 plaintiff assumed the task of getting a supplier of these parts (anvils, holder primers, and plunger supports) and reached an agreement to manufacture the requested products.
– April 13th, entered an agreement between Black and Bush – Bush was to send their products to Hoover, and Black would handle all the prices and payments.
o Compensation is – difference between Bush’s price to Black and Black’s price to Hoover.
o In accordance with government specifications and conformity of certain drawings.
o Black – entitled to the difference between the defendant’s quotation and the ultimate price.
o D failed to complete the order – which caused a loss of $14,625.
o D agreed to manufacture other quantities of the plunger supports and anvils, failure to comply caused a loss of additional $4,460.95.
o Irrelevant defenses.
o Then moves that the complaint is void against public policy.
– A contract can be D to pay P for inducing a public official to act in a certain manner.
– A contract to do an illegal act.
– A contract which contemplates collusive bidding on a public contract.
o Alleges that plaintiff was to receive gross profits from selling the product back to the government.
o Void against public policy – prices were passed on to the government and had increased prices because of that.
– U.S. district court NJ.
o Defendant moved for summary judgment, denied in favor of the plaintiff.
– Did plaintiff receive too much compensation deeming it unconscionable and against public policy.
– In order to declare a contract, entered by the parties freely and without evidence of fraud, void as against public policy, the contract must be invalid on the basis of recognized of recognized legal principles.
– Relative values of the consideration in a contract between business men at “arms-length” without fraud will not affect the validity of the contract.
– Defendant states the following…This is how the court ruled on the issues.
o Not a contract D to pay P for inducing a public official to act in a certain manner.
o Not a contract to do an illegal act.
o Not a contract which contemplates collusive bidding on a public contract.
– Only effect on the government is that they were to ultimately buy the product.
– It is possible that the plaintiff received too high a profit.
o Proof to establish that defendant quoted to low, and Hoover quoted to high would have to be proved.
– It is not the function of the court to interfere (by determining the validity of a contract) between ordinary business men on the basis of its belief as to the adequacy of the consideration
– Contact not against public policy and summary judgment was denied.
– ¬Free to contract if the contract is void of fraud.
o It is not the courts decision to deem a contract unconscionable between two merchants in the same business- its not there job to decide if someone’s profits are reasonable or not.