Good faith negotiations over various terms of an agreement do not make a fatally ambiguous contract valid and enforceable. The controlling California law is that for there to be an enforceable contract the parties must agree on the essential and material terms. If a contract has been agreed upon and all that remains is good faith negotiations or elaboration of non-essential terms, the contract will be held legally cognizable despite the uncertainties. The question is not whether good faith negotiations had taken place but whether the disputed sections were so essential to the contract that failure to agree on the pertinent terms made the contract unenforceable.
A professional basketball coach had signed a contract with a professional basketball team in LA. The LA team was sold to the ABA owner and moved to Utah. The coach subsequently resigned from the ABA team and became the coach of the NBA team. The ABA team owner brought an action against the coach and the NBA team owner for breach of contract and inducement. The District Court for Utah directed a verdict on liability against the coach.
Was the coach liable for breach of contract?
The court reversed the directed verdict on liability against the coach. The case was remanded for a new trial by a different judge outside the district of Utah because the trial judge had a strong personal bias and prejudice. The court held that a verdict could not be directed unless the evidence pointed one way and was susceptible of no reasonable inferences that sustained the position of the party against whom the motion was made. Since a reasonable man could have drawn an inference one way or the other on the provisions of the coach's contract in question, the matter was open on whether the provisions were essential terms of the contract and therefore not severable, or unessential terms and severable.