Trujillo Contracts: Agreements to Agree
Here is a case from my Contracts class which explains the concept of Open Agreements, which are agreements that have no fixated time or price. In other words, an agreement that has no set time or price, but both parties are still bargaining for exchange, is not an agreement at all.
Case Name, Citation Number, Author
Sun Printing & Publishing Association v. Remington Paper & Power Co., Inc., 139 N.E. 470 (N.Y. 1923)
Plaintiff motioned for a judgment on the pleadings in a breach of contract action. The motion was denied but reversed on appeal. The Defendant then appealed the order from the Appellate Division of the Supreme Court in the First Judicial Department.
–Plaintiff agreed to purchase 1000 tons of paper/month from Defendant.
–The price was set for Sept, Oct, Nov, and Dec,
–The balance of the agreement was that both parties would agree upon a price that would be no higher than the Canadian Export Paper Company charge for large customers,
–Prior to the expiration of the set terms the Defendant gave notice that the contract was imperfect and disclaimed future obligation to deliver,
–Plaintiff demanded delivery at the price set by Canadian Export Paper Company
Is the defendant bound to follow its future obligation to deliver under the open agreements
No because price and time terms were not met or agreed upon.
If intent cannot be assessed at all, there is a presumption that there is no intent to contract at all, or at least there is no actual agreement and therefore no mutual assent—no contract.
–Since the agreement on time was not met so is the agreement on price.
–Dissenting opinion from Judge Crane: Using the fair dealings standard the contract is valid, there was enough for the court to fill the gaps with course of dealings, course of performance, and usage of trade and courts shouldn’t allow the seller to avoid very clear contractual obligations
The Defendant’s appeal on the plaintiff’s motion for judgment on the pleadings is reversed on the grounds that the Defendant was not bound under contract where agreement as to price and time terms not reached.
UCC 2-305 Open price term: agree to renegotiate. UCC APPLIES WHEN THERE IS A SALE OF GOODS AND/OR SERVICES.
(1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if
(a) nothing is said as to price; or
(b) the price is left to be agreed by the parties and they fail to agree; or
(c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.
(2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.
(3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.
(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.
Restatements §34 Certainty and choice of terms; Crane opinions: part-performance and course of dealing can be used as gap fillers
(1) The terms of a contract may be reasonably certain even though it empowers one or both parties to make a selection of terms in the course of performance.
(2) Part Performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed.
(3) Action in reliance on an agreement may make a contractual remedy appropriate even though uncertainty is not removed.
If two people have not agreed on set price it is considered open, therefore you agree to renegotiate on the price at anytime you wish. So have a price and date set before you contract with someone.
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