Contracts Week 3 Day 2 PDF

Preview

Summary

Download Contracts Week 3 Day 2 PDF

Description

Contracts Week 3 Day 2 MUTUAL ASSENT, Continued Empro Manufacturing v. Ball-co Manufacturing, Inc. (1989)  







Parties signed an “agreement in principle” or a “letter of intent”, but the deal fell apart upon further expounding the terms, leading to suit. Paragraph 4 of letter stated “Empro’s purchase shall be subject to the satisfaction of certain conditions…” o Two conditions included the approval of the shareholders and board of directors Empro Learned Ball-co was negotiating with another purchaser, so Empro sought a temporary restraining order. o Judge concluded that, since the letter twice stated “subject to” the execution of a definitive contract, the letter had no independent force and Empro had no case It’s clear this letter was not understood to be a binding agreement even by Empro, which left itself ample room to back out before a final contract had been agreed to o See for example Empro’s condition that the shareholders or BOD could vote to back out o Nor does the text nor structure of the letter suggest that it was to be a one-sided commitment binding only Ball-co and not Empro. o Ball-co’s lawyer also stated in a its cover letter that the “terms and conditions are generally acceptable [but that] some clarifications are needed in Paragraph 3 [regarding Ball-co’s security interest].”  Clearly, this was not meant to be a binding contract if Ball-co meant to further clarify such an important point Affirmed International Casings Group, Inc. v. Premium Standard Farms, Inc. (2005)

   

 

Court grants ICG’s Motion for Preliminary Injunction PSF has supplied ICG with pork casings for over 6 years; ICG has employees and equipment on two PSF sites to harvest the casings The parties had a contract prior to May 2002, then terminated it thereupon but ICG employees continued to work onsite. In June 2002, they began new contract negotiations via email. Emails from 2004 from the lawyers of both parties are included verbatim o Pummill represents PSF; Sanecki represents ICG o In the emails, Sanecki refers to some documents as contracts, but the court does not believe a contract was reached as of that date o The emails entail extensive negotiations on several important points, and we see the lawyers acquiesce and make deals on these points, even seeking to expedite the process by meeting the other’s demands.  I can tell the issue here will be whether the parties indeed agreed to be bound or were simply seeking to sign a sort of agreement to agree November 2004 PSF sent ICG written notice of its intent to terminate the parties’ business relationship “In determining whether to grant a preliminary injunction [a motion compelling a party to dis/continue a particular course of action], courts weigh four factors:” o 1) the probability that the movant will succeed on the merits

Contracts Week 3 Day 2 2) the threat of irreparable harm to the movant 3) the balance between the harm to the movant and any harm that granting the injunction will cause to other parties to the litigation o 4) the public interest PSF contends there was never an agreement because there was never a “meeting of the minds” particularly with reference to the price o Whether there was a meeting of the minds is determined objectively by looking at the intent of the parties as expressed by their actual words or acts Court says the parties did in fact have a meeting of the minds since almost all points were clarified and resolved over the 2-year negation. However, price, the bloody guts, and the Clinton pipe were still being discussed o Court says that there is a point at which both parties had agreed to all points discussed PSF contends there was no agreement because it was not in writing o “Merely because parties intend a written memorialization of the agreed upon terms does not demonstrate that they intend the writing to be a condition precedent to the formation of a contract.” o “There is nothing in the communications or the actions of the parties that suggest that no contract was formed until the paper documents were formally signed by both [parties].” ICG’s Motion for Preliminary Injunction granted. o o









Joseph Martin, Jr., Delicatessen v. Schumacher (1981)   

   

   

This case calls upon the court to review a decision which held that a realty lease’s provision that the rent for a renewal period was “to be agreed upon” may be enforceable Ap (landlord) leased retail store to Respondent for a 5-year term at a rent graduated upwards from $500 per month for the first year to $650 for the fifth Tenant gave timely notice of desire to renew; landlord made it clear that he would renew only at a rental starting at $900/month o Tenant had appraiser judge rental; appraised at $545.41/month Tenant commenced action for specific performance Landlord moved to have tenant evicted On landlord’s motion for summary judgment, court held that a bald agreement to agree on a future rental was unenforceable for uncertainty as a matter of law; dismissed tenant’s complaint “A renewal clause in a lease providing for future agreement on the rent to be paid during the renewal term is enforceable if it is established that the parties’ intent was not to terminate in the event of a failure to agree.” An agreement to agree, in which a material term is left for future negotiations, is unenforceable o This is especially true of the amount to be paid for the sale or lease of real property The rule applies all the more, and not the less, when the extraordinary remedy of specific performance is sought Reversed Concurrence: agrees that this case does not fit the rule of May Metropolitan Corp. v. May Oil Burner Corp. [renewal clauses that call for agreements to be later mutually agreed upon are

Contracts Week 3 Day 2



enforceable], but disagrees that the majority’s rejection of that case as necessarily inapplicable to litigation concerning leases o Feels the principle can be applied to real estate deals, even though the code itself is only applicable to sales of goods Dissent: “If the tenant can establish its entitlement to renewal under the lease, the mere presence of a provision calling for renewal at “rentals to be agreed upon” should not prevent judicial intervention to fix rent at a reasonable rate in order to avoid a forfeiture.” o Jasen would affirm the lower court decision...