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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: February 28, 2021

Exchange of E-Mails Insufficient to Create Contract, but Could Serve as Basis of Unjust Enrichment Claim

On February 18, 2021, the First Department issued a decision in Sonenshine Partners, LLC v. Duravant LLC, 2021 NY Slip Op. 01135, holding that an exchange of e-mails was insufficient to create a contract, but could serve as the basis of an unjust enrichment claim, explaining:

Regarding SP’s breach of contract claim, the relevant provision in the NDA is an agreement to agree that is unenforceable. The agreement merely provides SP with the opportunity to act as a financial advisor based on terms to be negotiated later. The relevant provision failed to delineate the scope of SP’s role, the types of investment banking services it would provide to Duravant, or the fees associated with any transaction.

Although the agreement stated that Duravant would use commercially reasonable best efforts to ensure that SP had the opportunity to serve as its financial advisor, this fails to provide an industry standard that could clarify the missing terms and render the agreement enforceable.

SP has, however, stated a claim for quantum meruit/unjust enrichment. Contrary to Duravant”s contentions, SP”s claim is not barred by New York General Obligations Law (GOL) ยง 5-701(a)(10) because the complaint alleges that SP was not simply an intermediary, providing services in the negotiation or consummation of a business opportunity. Rather, it allegedly performed work aimed at informing Duravant whether to purchase Maillis or one of its subsidiaries. In any event, the agreement in conjunction with the emails between the parties could satisfy the requirements of GOL 5-701(a)(10) for purposes of SP’s quantum meruit/unjust enrichment claim, as the rule for a writing establishing quantum meruit claims is less exacting.

(Internal quotations and citations omitted).

In New York, a contract need not be in writing. However, whether oral; embodied in an exchange of e-mails, like the alleged contract discussed above; or in a full, formal written document, to be binding a contract must contain the material terms of the agreement. As this decision shows, there sometimes are disputes over whether all the material terms of the contract are embodied in the agreement being sued upon and, even if they are not, whether the e-mails can serve as the basis of a different claim. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.

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