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ATA Airlines, Inc. v. Fed. Express Corp. - 665 F.3d 882 (7th Cir. 2011)

Rule:

Courts interpret and enforce contracts; they don't make contracts. A contract is unenforceable if it is "indefinite" in the sense of missing vital terms, such as price, that can't be readily supplied by a court, for example by reference to a price formula agreed on by the parties. If the price or other vital missing term can't be reconstructed in that way, the "contract" shouldn't be called a contract at all, but an attempted contract; its indefiniteness renders it unenforceable.

Facts:

Plaintiff small airline filed a diversity suit for breach of contract against defendant air shipping company. Plaintiff obtained a jury verdict. The parties were members of a civil air fleet team where the defendant was the team leader. The suit was based on an agreement for allocation of the points granted the team. Defendant appealed. Plaintiff filed a cross-appeal that was conditional on the appellate court reversing the judgment of the district court.

Issue:

Is the agreement for allocation of points between the parties enforceable?

Answer:

No.

Conclusion:

The court reversed the judgment with instructions to dismiss the suit with prejudice. The court held that with so many contingencies, especially ones dependent on decisions entirely within the power and rights of each party, the agreement was a planning document rather than an enforceable contract. Therefore, the breach of contract claim should never have been permitted to go to trial.

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