## Facts

- Keller drew a $300 check payable to Holderman on a bank in Niles.
- The check was given in exchange for an old silver watch worth about $15.
- The trial court found the exchange was “a frolic and a banter,” with Holderman not expecting to sell and Keller not intending to buy at the stated price.
- Keller had no funds on deposit with the bank when he wrote the check and had intended to add a condition limiting liability but did not.
- Keller kept the watch until the day of trial, when he offered to return it; Holderman refused.
- Holderman sued Keller on the dishonored check.

## Issues

1. Whether a check issued in a transaction both parties understood to be a joke, with no intent to create a binding sale, is enforceable as a contract obligation.

## Decision

- The Michigan Supreme Court reversed the judgment for Holderman.
- Given the trial court’s factual finding that the transaction was “frolic and banter” with no intent to buy or sell at $300, no contract was formed.
- Because no contract existed, Holderman had no cause of action on the check.
- Reversal was with costs in both courts.

## Legal Principles

- A contract requires mutual assent, including intent by both parties to enter a legally binding transaction.
- An apparent bargain made in jest, where the other party understands it is not serious, does not create an enforceable agreement.
- The formal appearance of a negotiable instrument, and the maker’s failure to add limiting language, cannot supply contractual intent that both parties lacked.

## Conclusion

The court held that a check issued as part of a mutually understood joke does not create contractual liability because the parties lacked intent to be legally bound, so the payee cannot recover on the instrument.


Keller v. Holderman, 11 Mich. 248 (Mich. 1863)