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Four factors that courts look to in deciding whether the parties' words and deeds within a given bargaining context, show an intent to be bound only by a written agreement. While no single factor is decisive, each provides significant guidance. The four factors are: (1) whether a party has explicitly stated that it reserves the right to be bound only when a written agreement is signed; (2) whether one party has partially performed, and that performance has been accepted by the party disclaiming the contract; (3) whether there is literally nothing left to negotiate or settle so that all that remained to be done was to sign what had already been fully agreed to; and (4) whether the agreement concerns those complex and substantial business matters where requirements that contracts be in writing are the norm rather than the exception.
Plaintiff United Acquisition Corp. sought the aid of the court to enforce an allegedly binding contract to purchase all of the stock of United Refining, Inc. ("URI") from the defendants, Banque Paribas ("Paribas"), Banque Paribas Suisse, S.A. ("Paribas Swiss") and the Royal Bank of Canada ("Royal Bank"). According to the plaintiff, negotiations with the defendants’ representatives culminated in an agreement whereby the banks agreed to sell URI’s stock for a sum certain. The plaintiff prayed for an order enjoining defendant from selling any stock of URI or its URI's subsidiaries to any third parties. The defendants countered that there was no binding contract, because the terms had never been reduced to writing.
Did a binding contract exist between the parties, thereby warranting the grant of a preliminary or permanent injunction to enjoin defendants from selling the stock to a third party?
The court held that the corporation failed to make a showing going to the merits necessary to sustain an order for either a preliminary or permanent injunction because the corporation did not demonstrate that the parties intended to be contractually bound by anything other than a final written agreement. Even had there been an oral contract, such an agreement was unenforceable under the N.Y. U.C.C. Law § 8-319 for lack of either a writing or an admission by a party against whom enforcement was sought. Even though the corporation's representative offered a certified check for the stock, the banks' officials never accepted the check, and there was much left to negotiate because the only "deal" reached orally was the price of the transaction. The evidence showed that the parties did not intend to be contractually bound absent a written agreement.