Special Circumstances

Question 1

Special, Limited Circumstances

Answer 1

Offer and acceptance in context of negotiations when agreement appears incomplete:
Parties agree to agree in future—Walker (agreements to agree), or
Parties agree, but do not intend to be bound until final agreement signed—Quake majority (formal contract contemplated), or
Parties limit agreement to contract to negotiate toward contract—Quake concurrence.

Question 2

Walker
1) “Agreement to agree” case:
Parties are operating under an enforceable contract,
2) This contract expressly reserves something for future agreement (rent)

Answer 2

ISSUE: Is rental renewal mechanism in lease too indefinite : to enforce when it dictates monthly rent be set by actual agreement in accordance with comparative “rental values” in conjunction with “comparative business conditions” at date of renewal?
HOLDING: Yes, language ambiguous, indefinite, and equivocal and rent material lease term

Walker represents classical or traditional common law view

Question 3

Classical court holding = Essential Terms

Answer 3

1) Rent = price = essential term
2) Agreement to agree about price indefinite and unenforceable
3) Case represents attempt to set price term, not silence as to price term

Question 4

Essential Terms

Answer 4

Alternative language that rent to be adjusted based on “comparative business conditions” also indefinite
Express provisions for renewal must indicate with reasonable certainty when and how valuation must occur (arbitration, appraisal, formula or calculation)

Question 5

UCC 2-305: Price Terms vs. Common Law.

Answer 5

An open price term will not render an agreement unenforceable if the parties intended to be bound (Note 3, pp. 80-81)

Other common law courts have enforced similar lease renewal provisions (Notes 1 & 2, pp. 79-80)

Question 6

Quake Factors regarding ambiguity:

Answer 6

Usually in writing?
Many or few details?
Large or small amount of $?
Is writing required?
How far in negotiations?
Reason for abandoning?
Extent of assurances?
Degree of reliance?
Factors test different from elements-based test. Not all factors must be present.

Question 7

Summary—Walker, Quake

Answer 7

Walker: Agreements to agree= examine definiteness of existing contract term

Quake majority: Formal written Contract contemplated = need clear facts final writing intended before bound

Quake concurrence: Contract to negotiate in good faith