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Arnold Palmer Golf Co. v. Fuqua Indus., Inc. - 541 F.2d 584 (6th Cir. 1976)

Rule:

The question whether the parties intended a contract is a factual one, not a legal one, and, except in the clearest cases, the question is for the finder of fact to resolve. It is often the case that although the basic facts are not in dispute, the parties in good faith may nevertheless disagree about the inferences to be drawn from these facts, what the intention of the parties was as shown by the facts, or whether an estoppel or a waiver of certain rights admitted to exist should be drawn from such facts. Under such circumstances the case is not one to be decided by the trial judge on a motion for summary judgment.

Facts:

Plaintiff-appellant Arnold Palmer Golf Company filed a breach of contract action against defendant-appellee Fuqua Industries, Inc. after Fuqua informed Palmer that it did not intend to go through with a deal between the parties, which was culminated in a document denominated as a memorandum of intent. The district court granted summary judgment in Fuqua’s favor, finding that the document was not a contract and that the parties were not bound until a definitive agreement satisfactory to both parties had been prepared. Palmer appealed. 

Issue:

Did the district court err in deciding on the issue of whether the document signed by the parties was intended as a contract?

Answer:

Yes

Conclusion:

The United States Court of Appeals stated that the primary issue in this case was whether the parties intended to enter into a binding agreement when they signed the Memorandum of Intent, and the primary issue on appeal was whether the district court erred in determining this question on a motion for summary judgment.

The Court reversed and remanded for trial. Upon a review of the evidence submitted in connection with the motion for summary judgment, the Court found there was a a factual issue whether the parties contractually obligated themselves to prepare a definitive agreement in accordance with the understanding contained in the memorandum of intent. Accordingly, the Court held that the issue of the parties' intention was for resolution by the trier of fact. Consideration of the entire document and the relevant circumstances surrounding its adoption, including extrinsic evidence, was required to determine the parties' intention. Finally, the Court held that whether Palmer could recover lost profits required further proof.

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