Woodhouse v. Halili
The plaintiff and the defendant entered into a written agreement that, in the future, they shall organize a partnership for the bottling and distribution of Mission soft drinks with the plaintiff to act as industrial partner or manager, and the defendant as capitalist.
The agreement was entered into after the plaintiff intimated to the defendant that he had an exclusive franchise that of the bottling and distribution of the said soft drinks and that it would be transferred to the partnership or the plaintiff after they go to Mission’s main base of operations in California. Unfortunately, upon arrival, the defendant has come to know that the exclusive rights for the plaintiff had not yet been secured and was only about to be secured.
Thus, the defendant refused to go further with the agreement. The plaintiff then filed a complaint for the execution of a contract of partnership and a share of 30% in the profits.
- Is the agreement null and void?
- May the execution of a contract of partnership be enforced?
1. No. The Court held that the agreement is binding. The Court concluded that the contract cannot be null and void since the plaintiff’s consent in entering the contract is not vitiated. What was vitiated was his consent in allowing the plaintiff 30% in the net share of the profits should the partnership agreement push through, not the contract itself.
2. No. The Court held that the plaintiff’s consent to enter into the contract of partnership as stipulated in the agreement is an obligation to do, which cannot be forced by the Courts for being unconstitutional. The contract itself indicated that they shall enter into a partnership – in the future – and not that the partnership was to be in force after the conditions are fulfilled.