If essential terms of an agreement are omitted or are phrased in too indefinite a manner, no legally enforceable contract will result. However, the United States Court of Appeals for the Second Circuit is cautious about applying this rule to invalidate contracts, and has also noted that an agreement need not spell out all details of the bargain in order to be enforceable. Even if the parties have left some terms of their agreement indefinite, a court may enforce the agreement if it has means of giving content to the indefinite terms, or if those terms are not material to the bargain.
Plaintiff literary agent and defendant poet signed a letter agreement to create a joint venture between them, where the agent would market the poet’s work to greeting card companies. The poet advised defendant greeting card company that the agent had the exclusive right to represent her. The agent and company produced a draft license agreement, but the poet discharged the agent and later entered into a contract with the company. Plaintiff sued defendants alleging that the poet breached her fiduciary duty and the company tortuously interfered with a contract. The poet counterclaimed, alleging fraud and unilateral mistake against the agent and counter-defendant, its principal. The agent alleged that the company both tortiously interfered with the contract and aided the poet in breaching her fiduciary duties. The district court granted summary judgment on all claims. The agent and the poet appealed.
Is a letter agreement, which lacks elements of a proper agreement, but is agreed upon by all parties, enforceable when one party discharges her responsibilities referred to in the letter prior to the issuance of a formal license agreement?
The appellate court agreed with the trial court that the letter agreement did not create a joint venture, so the claims of breach of fiduciary duty and aiding such breach were properly dismissed. The letter agreement lacked certain terms essential to creating a joint venture under either New York or North Carolina law. The poet’s reliance on the representations she claimed the principal made about the letter agreement were deemed unreasonable and thus her counterclaim was dismissed. The case was remanded for consideration of whether the letter agreement could be construed as a bilateral contract.