On January 6, 2017, Justice Scarpulla of the New York County Commercial Division issued a decision in McGowan v. Clarion Partners, LLC, 2017 NY Slip Op. 30019(U), holding that a term sheet was a binding contract, explaining:
The standard for determining whether the essential terms are included in a contract is necessarily flexible, varying for example with the subject of the agreement, its complexity, the purpose for which the contract was made, the circumstances under which it was made, and the relation of the parties. In order to be enforceable, a contract must contain all of the material terms which one would reasonably have expected to be included under the circumstances. The items which must be set forth in a writing are those terms customarily encountered in a particular transaction.
. . .
The Term Sheet and the Business Plan referenced therein set forth the material terms of the proposed CPE joint venture. . . .
Not all terms of a contract need be fixed with absolute certainty; at some point virtually every agreement can be said to have a degree of indefiniteness. While there must be a manifestation of mutual assent to essential terms, parties also should be held to their promises and courts should not be pedantic or meticulous in interpreting contract expressions. Imperfect expression does not necessarily indicate that the parties to an agreement did not intend to form a binding contract. A strict application of the definiteness doctrine could actually defeat the underlying expectations of the contracting parties.
The parties’ agreement to form a joint venture and their understanding that the performance of that joint venture would require additional documents resolving numerous details is demonstrated by the last provision in the Term Sheet that provides, agreed amongst the parties but subject to signed documentations. Thus, the Term Sheet’s plain language expressed the parties’ intention to be bound.
(Internal quotations and citations omitted).