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Current Developments in the Commercial Divisions of the
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Posted: October 9, 2015

Alleged Contract Unenforceable Agreement to Agree

On October 2, 2015, Justice Platkin of the Albany County Commercial Division issued a decision in Prosource Technologies, LLC v. Housing Trust Fund Corp., 2015 NY Slip Op. 51480(U), holding that a contract was an unenforceable agreement to agree, explaining:

A mere agreement to agree, in which a material term is left for future negotiations, is unenforceable. But where the contracting parties manifest a clear intent to bind themselves to future performance, the fact that some terms may be left open does not necessarily render the agreement unenforceable.

(Internal quotations and citations omitted).

The first alleged contract at issue was an unsigned agreement that the defendant “submitted as an exhibit to [a proposed deal]. [The plaintiff] allege[d] that, by submitting the [a]greement as part of its Proposal . . . [the defendant] represented that it was a binding contract to which [the parties] agreed and by which it intended to be bound.” The court disagreed, finding that by its terms the contract was not a final agreement and at any rate “lack[ed] sufficient definiteness to be an enforceable contract,” because the defendant’s “only obligation as prime contractor would have been to exert every effort to negotiate and award a subcontract to [the plaintiff].” Further, the agreement was “missing any specification of the services to be rendered by [the plaintiff] and the compensation to be paid by [the defendant] for those services.”

The second alleged agreement was an oral agreement that the court found unenforceable because it was only an oral agreement to negotiate the unsigned written contract the court already had found unenforceable. Further, the agreement “is barred by the statute of frauds, as it cannot be performed within one year of its making.”

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