In the case of Water-Works Company v. Barrett, the Supreme Court ruled that a contract between two parties is binding even if it was made under false pretenses or misrepresentations by one party. The plaintiff in this case had contracted with defendant to purchase certain water works and property for $20,000. After making payments on the contract totaling $14,500, plaintiff discovered that some of defendant's representations were false and refused to make any further payments. Defendant then sued for breach of contract claiming he was entitled to full payment according to their agreement regardless of his misrepresentations during negotiations leading up to signing the contract. The court held that while fraudulent statements may be considered when determining damages due from a breach of contract they do not render an otherwise valid agreement voidable at either party’s discretion; thus affirming defendant’s right to receive full payment as agreed upon in their original contractual arrangement despite his prior misstatements regarding its terms and conditions

Justice Field delivered the dissenting opinion in this case. He argued that the plaintiff had no right to bring a suit against the defendant for damages caused by an alleged breach of contract, as there was no privity between them. The contract was made solely between two other parties and did not involve either of them directly. Furthermore, he noted that even if it could be established that one party breached their contractual obligations to another, such a breach would not necessarily give rise to any legal liability on behalf of those who were not involved in making or performing under said agreement. Therefore, Justice Field concluded that since neither party had any direct involvement with each other nor with the original contract itself, they should both be absolved from all responsibility for its performance or lack thereof and thus have no cause of action against each other for damages resulting from it.