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Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

Supp. To CHAPTER 2 OFFERS: CREATION AND DURATION OF POWER OF ACCEPTANCE

1-2 Corbin on Contracts Supp. to § 2.10

Supp. to § 2.10 What Constitutes a Written Contract-There May Be a Series of Communications

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(A) The following cases cite this section or its predecessor:

(1) Aramony v. United Way of America, 28 F. Supp. 2d 147 (S.D.N.Y. 1998) (quoting Corbin) (senior vice president of United Way had authority to sign a pension benefit plan with a non-forfeiture provision, despite the adoption by the Executive Committee of a draft plan with a felony forfeiture provision). This case is also noted in Sections 1.23and 4.1 of this supplement.

(2) Coffey v. Mann, 7 Neb. App. 805, 585 N.W.2d 518 (1998) (quoting Corbin). A contractor argued that homeowners pled the existence of a written contract, while proof at trial indicated that there was an oral contract, and that proof consequently did not match the pleadings. The court held that both parties expressed mutual assent to the terms of the unsigned written contract through their respective acceptance of benefits.

(3) DiMase v. Aquamar 176, Inc., 835 So. 2d 1150 (Fla. Dist. Ct. App. 2002) . Proposed buyers of two condominiums signed purchase agreements that expressly excluded floor coverings, along with proposed addenda stating that the seller was to install, at its own cost, marble flooring throughout the units, the buyer to specify design and color. While the seller approved the purchase price, the parties were unable to reach agreement as to flooring after exchanging multiple proposals. As a result, the buyers sought the return of their deposits.

The court rejected the buyers' argument that the purchase agreements were mere offers that were rejected when the parties were unable to reach agreement on the flooring. The court examined the terms of the purchase agreements and concluded the parties intended to enter into binding contracts. The agreement stated it was an entire contract that could only be modified by a written instrument signed by the party against whom enforcement was sought. It further contained a severability clause providing that unenforceable provisions would be modified or nullified to reach the paramount goal of strict enforcement of its terms. Moreover, the buyer had 15 days after its execution to provide written notice of termination. The court applied an objective test in concluding the parties had reached a valid contract for the purchase and sale of the units. The court rejected the buyers' contention that no contract had been formed since there had been no meeting of the minds. The court held that while mutual assent is necessary as to all essential terms of the contract, the buyers failed to prove that marble flooring was an essential term such that disagreement over it would preclude contract formation. Moreover, the purchase agreements specifically excluded flooring absent an addendum signed by both parties.

The dissent construed the documents signed by the buyers together as an offer. It noted that the seller did not sign the documents until days later when it signed the purchase agreements but not the addenda. It concluded the seller rejected the offer when it rejected the flooring addenda and made an alternate flooring proposal. Corbin is cited as authority for the usual rule that there is no contract until the parties cease negotiations and express assent as to all terms of the transaction together. While the dissent recognized that every contingency need not be dealt with, it characterized flooring as essential and a ''deal-killer''. As a result, it concluded there was no ''meeting of the minds'' and, therefore, no contract.

(4) Thomas & Assocs., Inc. v. Metropolitan Gov't of Nashville and Davidson County, 2003 Tenn. App. LEXIS 425 (Tenn. Ct. App. June 6, 2003) . As the general contractor on two road improvement projects, the plaintiff claimed that substantial delays in completing the projects causing it to suffer a substantial financial loss were due to the failure of the defendant's Department of Transportation to comply with utility relocation statutes and to provide the needed right of way to allow the projects to be completed on time. The cover page of the plaintiff's proposal to secure the award for the project referred to a state statute dealing with utility relocation. Though admitting that the terms of such a proposal become part of the final contract when the department awards the contract, the defendant claimed that the notation on the proposal did not become part of this contract. Citing Corbin, the instant court held that prior or contemporaneous agreements assimilate into the final contract. Thus, the contract included the utility relocation statute. The contract, however, also included a ''No damages for delay'' clause which placed the burden of dealing directly with the utilities on the contractor. While the defendant may have failed to exercise the diligence literally required by the utility relocation statutes, it did not engage in active interference that would have made the ''No damage for delay'' clause unenforceable. The court, therefore, agreed with the trial court that the clause barred the plaintiff's claim on that basis. Unlike the trial court, however, the instant court held that the clause did not bar the plaintiff's claim that the defendant's failure to acquire right of way parcels breached the defendant's obligation implied in construction contracts to furnish the contractor with the work site necessary to perform the contract-an implied obligation of good faith and fair dealing. The court held that the defendant's failure to meet this obligation created triable issues that should not have been concluded by a summary judgment. The court reversed and remanded the case on this issue.

(5) In re Bunzl USA, Inc., 2004 Tex. App. LEXIS 235 (Tex. App.-El Paso Jan. 8, 2004) . The defendant employer entered into an employment agreement which contained an arbitration provision, with the plaintiff employee. When the plaintiff filed suit against the defendant alleging race discrimination and intentional infliction of emotional distress, the defendant moved to compel arbitration. The trial court denied the motion since the agreement was not signed by the employer and no evidence was offered to prove that the employee signature was authentic. The defendant then petitioned for a writ of mandamus to the instant court to correct an alleged abuse of discretion by the trial court, arguing that there is no other adequate remedy at law when a trial court improperly denies a motion to compel arbitration. Applying contract principles to determine whether a valid arbitration agreement existed, the court cited Corbin in support of the principle that, regardless of whether a contract has been signed, if the parties have unconditionally assented to the terms stated in the document, the document constitutes a binding contract. In the absence of a signature, other evidence must be relied upon to prove each party's unconditional assent. Whether a written contract must be signed to be binding is a question of the parties' intent, which is a fact question to be resolved by the trial court. The appellate court reasoned that it could not overturn the trial court's resolution of this question unless the defendant established on appeal that the trial court could reasonably have reached only the opposite conclusion. Because there was conflicting evidence, the court held that the trial court could reasonably have concluded that the defendant did not establish the existence of an agreement to arbitrate. It, therefore, denied the petition for the writ of mandamus.

(6) In re Beyond the Arches, Inc., 2004 Tex. App. LEXIS 6930 (Tex. App.-Beaumont July 29, 2004) . When she was injured at work, the plaintiff sued the defendant for negligence. The defendant moved to compel arbitration, which the trial court denied. The defendant filed this petition for a writ of mandamus to correct a clear abuse of discretion where there was no adequate remedy at law. The instant court explained that a party seeking to compel arbitration must prove that an arbitration agreement exists. The defendant claimed that employees were given a copy of the dispute resolution program (the ''Right Plan'') at the time of employment. While the plaintiff signed a release of medical records form, the defendant produced no arbitration agreement signed by the plaintiff. Moreover, the plaintiff testified that she never saw or knew of the dispute resolution program prior to her lawsuit. The court cited precedent relying on this section of Corbin for the proposition that a signed writing strongly indicates the signer's unconditional assent to the terms of the writing and an unsigned writing to which unconditional assent has been manifested is binding, notwithstanding the lack of a signature. The absence of a signature, however, required the defendant to sustain the burden of establishing that the plaintiff intended to be bound to the unsigned arbitration agreement. The question was one of intention. The trial judge considered the evidence and was free to believe the plaintiff's testimony that she neither signed, intended to be bound by or had any knowledge of an arbitration agreement. The defendant did not produce contrary evidence. The instant court held that, under the mandamus standard, the trial court's denial of the motion to arbitrate was not arbitrary and unreasonable.

(7) In re Big 8 Food Stores, Ltd., 166 S.W.3d 869 (Tex. App. El Paso 2005) . Maria Marquez (''Marquez'') was an employee of plaintiff, Big 8 Food Stores, Ltd. (''Big 8''). Marquez was injured in the course and scope of her employment with Big 8 and sued for negligence. Big 8 moved to compel arbitration based on language contained in an Employee Injury Benefit Plan signed by Marquez. Marquez argued that she did not knowingly agree to arbitrate and that the arbitration agreement should not be upheld. Citing Corbin, the instant court noted that a party's signature on a written contract is strong evidence that the party assented to its terms. Marquez admitted to signing the document and accepted the benefits of the agreement in the form of payment of her medical bills and expenses. She, however, argued that she did not understand what she was signing. Evidence was presented that Marquez was present during benefit meetings when the benefit program was discussed. Further, the court noted that no evidence was presented suggesting that Marquez lacked the mental capacity to contract. Therefore, the court determined that Marquez was bound by the agreement to arbitrate.

(8) Pelletier v. Noel, 2005 Me. Super. LEXIS 63 (2005) . The defendants, children of the decedent, challenged the terms of their father's will on the footing that the plaintiff-widow interfered with their expectancy and exerted undue influence over their father. The defendants filed suit, but in September, 2002, the parties agreed to a settlement whereby the plaintiff would deed title to contested real estate to an irrevocable trust to be managed by attorneys for both parties. The attorneys for the parties notified the court of the settlement, and the suits against plaintiff were dismissed with prejudice. Two of the four defendants signed the documentation prepared in connection with the settlement, and spaces were left blank for the other two. The two defendants who did not sign authorized one of the other defendants to sign on their behalf, but the other defendant only signed on behalf of one of the two. When the plaintiff learned that not all the signatures were obtained, she made arrangements to sell the property and instructed her new attorney to notify the defendants that she was revoking the settlement agreement and trust because the documents had not been signed in a timely manner. She then sought a declaratory judgment that the settlement and related trust and deed were void because the documents had not been signed within a reasonable time, and that the plaintiff's offer to settle had been properly revoked. The defendants filed a counterclaim, alleging that the plaintiff breached the terms of the settlement and trust agreements. Both parties filed motions for summary judgment. The court explained that compromise settlements of will contests are looked upon favorably by the courts to reduce litigation and to contribute to harmonious family relations. The court cited Corbin's proposition that ''under contract law, if a written draft of an agreement is prepared, submitted to both parties and each of them expresses unconditional assent thereto, there is a written contract.'' There no need for signatures unless the parties have made signatures necessary at the time they expressed their assent, or as a condition modifying that assent. Thus, an unsigned agreement, all of the terms of which are embodied in writing that are unconditionally assented to by both parties, is a written contract. A contract exists if the parties mutually assent to be bound by all its material terms; the assent is either expressly or impliedly manifested in the contract; and the contract is sufficiently definite to enable the court to ascertain its exact meaning and fix exactly the legal liability of each party. In addition, a person can ratify a contract even though his or her signature was expected but is missing. The contract is considered ratified by the non-signatory's affirmance when he does not object and elects to treat the contract as binding. An affirmance of an unauthorized transaction can be inferred from a failure to repudiate. The court concluded there was no dispute that the parties negotiated an agreement to create a trust in the property named. There was no dispute that the parties negotiated an agreement to settle the lawsuits pending against the plaintiff. Moreover, the settlement agreements were sufficiently definite to allow the parties to inform the courts that a global settlement had been reached with all defendants. The two defendants who did not sign the documents resided or sometimes worked out of state. Nothing in the record suggested that the parties were operating under narrow time constraints, that ''time was of the essence,'' or that plaintiff was in any way prejudiced by the time needed to gather the signatures. The first two defendants signed the documents on September 11, 2003, and the plaintiff initiated suit seeking the declaratory judgment on July 12, 2004. The court noted that prior to the first two defendants signing, the parties negotiated a fairly complicated agreement to share interests in property, then took an additional year to craft all the terms of their agreement into a final written form. In light of these circumstances, the court concluded that it was not unreasonable for all of the defendants not to sign the documents within nine months, especially where all parties assented unconditionally to their terms and where substantial performance by both sides, including dismissal of the suits against the plaintiff to her benefit, was well underway. The plaintiff's motion for summary judgment was denied.

(9) In re People's Choice Home Loan, Inc., 2005 Tex. App. LEXIS 6823 (2005) . Mr. and Mrs. Jimenez received a home equity loan from People's Choice. After the closing, Mrs. Jimenez realized that they had been overcharged in fees and costs. She contacted People's Choice and advised of the overcharge, but it failed to respond. The Jimenezes sought declaratory relief and People's Choice filed a motion to compel arbitration under an arbitration clause in the loan agreement. The Jimenezes argued that the arbitration clause was not enforceable for various reasons. Upon review, the court explained that it first must determine whether a valid agreement to arbitrate exists. Citing Corbin, the court found that the Jiminezes signed the agreement, and a party's signature is ''strong evidence'' that the party assented to the contract terms. Thus, the court held that they were bound by the arbitration agreement and their claims fell within the scope of the agreement.

(10) In Re December 9 Company, Ltd., (Tex. 2006) . December 9 Company, Ltd (''December 9'') operated several group residential homes licensed by the State of Texas as inpatient mental health facilities. Estrada and Daher were employees of December 9 who filed a wrongful discharge suit alleging that their termination was in retaliation for reporting illegal activities to their supervisors and the Texas Department of Disabled Services, in violation of Tex. Health and Safety Code ANN. § 161.134. December 9 filed an affirmative defense that there existed a valid and enforceable arbitration agreement between the parties and provided as evidence the company's Alternative Dispute Resolution (''ADR'') Program and written acknowledgments of receipt executed by Estrada and Daher. In response, Estrada and Daher challenged the enforceability of the arbitration agreement, stating they did not recall signing the acknowledgment forms and that they did not understand the ADR Program document upon recent review. Citing Corbin, the court explained that ''[a] party's signature on a written contract is 'strong evidence' that the party unconditionally assented to its terms.'' Further, the court explained that the enforceability of the arbitration agreement was not affected by Estrada's and Daher's claim that they did not understand the ADR Program. The signed acknowledgment forms notified Estrada and Daher of December 9's ADR Program and each form stated above their respective signatures that the parties had an opportunity to review that Program. The court concluded that the matter should proceed in arbitration.

(11) Weaver v. Trinity College, 2007 Conn. Super. LEXIS 861 (Conn. 2007) . The plaintiff claimed that chapters to a manuscript that were authored by the decedent, formally a professor at Trinity College, were used to create a new manuscript that was subsequently published under a new title. Credits for authoring the final manuscript were claimed by individuals other than the decedent. In addition to decedent's teaching duties, he also served as the college historian and was credited with establishing the Trinity College archives. After ten years of research and writing, The History of Trinity College, Volume I was published. The decedent was listed as the sole author and he understood that this work was to be the first in a two volume set. In 1982, the defendant's acting president approached the decedent about writing Volume II of the college's history. Although no formal written document was signed by the parties with regard to the manuscript for Volume II, a series of letters were exchanged between the decedent and Trinity College, beginning in 1982 and continuing into 1999. The letters indicated that due to his declining health, the decedent relinquished primary editorial control of the project and agreed that another individual would finish the book. Citing Corbin, the court explained that parties may express their assent piecemeal, agreeing upon individual terms as the negotiation proceeds. These expressions are merely tentative and are inoperative in themselves; there is no contract until the parties close their negotiation and express assent to all the terms of the transaction together. In giving expression to such a final assent, however, the parties frequently do not restate various terms that they have previously tentatively agreed upon. Those terms may be either formally or tacitly incorporated by reference. This is especially likely to be true when the negotiation has been conducted by letter. Thus, in determining the existence of a contract and its terms, the entire correspondence must be searched and interpreted. The court found that a valid contract existed, but the decedent relinquished primary editorial control over the project and agreed that another would finish the book. Thus, the court could not find that Trinity College breached its agreement with the decedent.

(B) The following cases are noteworthy:

(1) Morton v. Hewitt, 202 F. Supp. 2d 394 (D.V.I. 2002) . When a hurricane caused major damage to two houses, Morton submitted estimates to the owners which included statements of the work to be done, the price and the time for performance. The owners made a partial payment and Morton began work on both properties. The owners claimed long delays, unauthorized changes, and Morton's failure to complete the work. Morton claimed that the written estimates he had submitted did not evidence contracts because they were not signed and were not sufficiently definite. The court held that, even if the estimates alone did not evidence a binding contract, the estimates plus the performance clearly evidenced an intention to contract with the owners. Moreover, the estimates were sufficiently definite to allow a court to effect a remedy for breach of contract.

(2) Detroit Tigers, Inc. v. Ignite Sports Media, LLC, 203 F. Supp. 2d 789 (E.D. Mich. 2002) . The plaintiff and defendant entered into negotiations for the defendant's creation of an official Detroit Tigers website. The negotiations were evidenced by a letter of intent that was not legally binding, but led to the creation of a twenty-six page document evidencing a ''media services agreement'' (MSA) under which the plaintiff would grant an exclusive license to the defendant to use the plaintiff's trademarks, service marks and logos on the new website, royalty-free, in exchange for an annual payment of $600,000 plus half of the adjusted gross revenue in excess of $1 million. The agreement was submitted to the Commissioner of Major League Baseball for approval. Though neither party signed the document, the defendant created, maintained and hosted the website for the entire 2000 baseball season without the plaintiff's objection. The defendant did not pay the plaintiff $600,000. The plaintiff sued on counts of breach of an express contract, breach of an implied-in-fact contract, breach of a promise enforceable under a promissory estoppel theory, and a count to protect its restitution interest to prevent the unjust enrichment of the defendant. The defendant moved to dismiss each count.

The court denied the defendant's motion on the express contract count since mutual assent to the terms of the MSA could be evidenced by the conduct of the parties in performing their respective obligations thereunder, notwithstanding a lack of signatures on the MSA document. The court denied the motion to dismiss the alternative implied-in-fact contract count since, assuming an express contract was not found, the plaintiff permitted the defendant to use its trademarks, etc. exclusively and the defendant pursued their use in a commercial endeavor. Similarly, the court denied the defendant's motion to dismiss the plaintiff's alternative unjust enrichment count, in order to permit the recovery by the plaintiff of any unjust enrichment of the defendant if either the express or implied-in-fact counts should fail. The court, however, granted the defendant's motion to dismiss the alternative promissory estoppel count since promissory estoppel is a method to enforce bargains that lack consideration. The plaintiff alleged consideration in granting the defendant the exclusive right to use its trademarks, service marks and logos on a website. Since the plaintiff was, therefore, already bound to suffer the detriment of forbearing such licensing to others, the court held that its promissory estoppel claim was defective as a matter of law.

(3) Conley v. Johnson, 580 S.E.2d 865 (W. Va. 2003) . The Johnsons signed a contract document stating that they had agreed to sell to the Conleys a house and two lots, which the Conleys understood to be lot 7, on which the house was built, and adjoining lot 8 as described on the plat provide to them. After the agreement was formed, the Johnsons subdivided lot 7 into lots 7, 8 and 9, which they proposed to transfer to the Conleys. This would result in the Conleys receiving only original lot 7. The Conleys never signed the contract document. In response to the Conleys' complaint, the Johnsons moved for summary judgment, which the court granted without precise reasons. On appeal, the court assumed that the trial court decided that the parties had no enforceable contract under the statute of frauds for the sale of land since the buyers had not signed the document. The court held that the West Virginia statute of frauds only requires the document to be signed by the party to be charged. Since it was signed by the sellers, the statute of frauds requirement was met. The court assumed that the trial court's decision was also based on a lack of mutual assent or ''meeting of the minds.'' The court held that this was a fact question as to which summary judgment is rarely appropriate. Given the factual development of the case, the court concluded that further development of the evidence was necessary. The court reversed and remanded the case.