Commercial Division Blog
Posted: January 25, 2021 / Categories Commercial, Contracts
Contract's Requirement That Party Accept "Reasonable" Purchase Offers Enforceable
On January 13, 2021, the Second Department issued a decision in LMEG Wireless, LLC v. Farro, 2021 NY Slip Op. 00164, holding that a contract's requirement that a party accept "reasonable" purchase offers was enforceable, explaining:
Here, the first three causes of action alleged that the defendant committed breach of contract as to each plaintiff individually in reneging on his promise to accept any reasonable offer for the purchase of LMEG Wireless by rejecting the TZP offer. While the defendant is correct that a court cannot enforce a contract unless it is able to determine what in fact the parties have agreed to, the terms of a contract do not need to be fixed with absolute certainty to give rise to an enforceable agreement. Contrary to the defendant's assertion, an agreement to accept a reasonable offer is not necessarily unenforceable; instead, a party may agree to be bound to a contract even where a material term is left open provided there is sufficient evidence that both parties intended that arrangement.
Here, since the agreement involved offers by third parties, leaving open what constituted a "reasonable offer" was not inappropriate. There were objective criteria, such as whether an offer comported with the company's value as established by an analysis of its financial records, which could be used to determine whether a given offer was reasonable.
(Internal quotations and citations omitted).
Part of the reason parties to commercial contracts choose to have those contracts governed by New York law is that New York courts typically enforce contracts as written. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client have questions regarding the interpretation of a contract under New York law.