225
Chapter 11
Agreement in Traditional
and
E-Contracts
Case 11.1
196 Va. 493
LUCY
v.
ZEHMER
Supreme Court of Appeals of Virginia, Richmond
November 22, 1954.
BUCHANAN, J., delivered the opinion of the court.
This suit was instituted by W. O. Lucy and J. C. Lucy, complainants, against A. H. Zehmer and Ida S. Zehmer, his wife,
defendants, to have specific performance of a contract by which it was alleged the Zehmers had sold to W. O. Lucy a tract of land
owned by A. H. Zehmer in Dinwiddie county containing 471.6 acres, more or less, known as the Ferguson farm, for $50,000. J. C.
226 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
The answer of A. H. Zehmer admitted that at the time mentioned W. O. Lucy offered him $50,000 cash for the farm, but that he,
Zehmer, considered that the offer was made in jest; that so thinking, and both he and Lucy having had several drinks, he wrote out
“the memorandum” quoted above and induced his wife to sign it; that he did not deliver the memorandum to Lucy, but that Lucy
picked it up, read it, put it in his pocket, attempted to offer Zehmer $5 to bind the bargain, which Zehmer refused to accept, and
realizing for the first time that Lucy was serious, Zehmer assured him that he had no intention of selling the farm and that the whole
matter was a joke. Lucy left the premises insisting that he had purchased the farm. Depositions were taken and the decree
appealed from was entered holding that the complainants had failed to establish their right to specific performance, and dismissing
their bill. The assignment of error is to this action of the court. W. O. Lucy, a lumberman and farmer, thus testified in substance:
He had known Zehmer for fifteen or twenty years and had been familiar with the Ferguson farm for ten years. Seven or eight years
ago he had offered Zehmer $20,000 for the farm which Zehmer had accepted, but the agreement was verbal and Zehmer backed
Zehmer refused, saying, “You don’t need to give me any money, you got the agreement there signed by both of us.”
The discussion leading to the signing of the agreement, said Lucy, lasted thirty or forty minutes, during which Zehmer seemed to
doubt that Lucy could raise $50,000. Lucy suggested the provision for having the title examined and Zehmer made the suggestion
that he would sell it “complete, everything there,” and stated that all he had on the farm was three heifers. Lucy took a partly filled
bottle of whiskey into the restaurant with him for the purpose of giving Zehmer a drink if he wanted it. Zehmer did, and he and Lucy
had one or two drinks together. Lucy said that while he felt the drinks he took he was not intoxicated, and from the way Zehmer
handled the transaction he did not think he was either. December 20 was on Saturday. Next day Lucy telephoned to J. C. Lucy
and arranged with the latter to take a half interest in the purchase and pay half of the consideration. On Monday he engaged an
attorney to examine the title. The attorney reported favorably on December 31 and on January 2 Lucy wrote Zehmer stating that
the title was satisfactory, that he was ready to pay the purchase price in cash and asking when Zehmer would be ready to close
the deal. Zehmer replied by letter, mailed on January 13, asserting that he had never agreed or intended to sell.
Mr. and Mrs. Zehmer were called by the complainants as adverse witnesses. Zehmer testified in substance as follows:
He bought this farm more than ten years ago for $11,000. He had had twenty-five offers, more or less, to buy it, including several
from Lucy, who had never offered any specific sum of money. He had given them all the same answer, that he was not interested
in selling it. On this Saturday night before Christmas it looked like everybody and his brother came by there to have a drink. He
took a good many drinks during the afternoon and had a pint of his own. When he entered the restaurant around eight-thirty Lucy
was there and he could see that he was “pretty high.” He said to Lucy, “Boy, you got some good liquor, drinking, ain’t you?” Lucy
then offered him a drink. “I was already high as a Georgia pine, and didn’t have any more better sense than to pour another great
big slug out and gulp it down, and he took one too.”
CHAPTER 11: AGREEMENT 227
me see it.’ He reached and picked it up, and when I looked back again he had it in his pocket and he dropped a five dollar bill over
there, and he said, ‘Here is five dollars payment on it.’ * * * I said, ‘Hell no, that is beer and liquor talking. I am not going to sell you
the farm. I have told you that too many times before.'”
Mrs. Zehmer testified that when Lucy came into the restaurant he looked as if he had had a drink. When Zehmer came in he took a
drink out of a bottle that Lucy handed him. She went back to help the waitress who was getting things ready for next day. Lucy and
Zehmer were talking but she did not pay too much attention to what they were saying. She heard Lucy ask Zehmer if he had sold
the Ferguson farm, and Zehmer replied that he had not and did not want to sell it. Lucy said, “I bet you wouldn’t take $50,000 cash
for that farm,” and Zehmer replied, “You haven’t got $50,000 cash.” Lucy said, “I can get it.” Zehmer said he might form a company
and get it, “but you haven’t got $50,000.00 cash to pay me tonight.” Lucy asked him if he would put it in writing that he would sell
him this farm. Zehmer then wrote on the back of a pad, “I agree to sell the Ferguson Place to W. O. Lucy for $50,000.00 cash.”
Lucy said, “All right, get your wife to sign it.” Zehmer came back to where she was standing and said, “You want to put your name
to this?” She said “No,” but he said in an undertone, “It is nothing but a joke,” and she signed it. She said that only one paper was
written and it said: “I hereby agree to sell,” but the “I” had been changed to “We”. However, she said she read what she signed and
was then asked, “When you read ‘We hereby agree to sell to W. O. Lucy,’ what did you interpret that to mean, that particular
phrase?” She said she thought that was a cash sale that night; but she also said that when she read that part about “title
(1) In his testimony Zehmer claimed that he “was high as a Georgia pine,” and that the transaction “was just a bunch of two
doggoned drunks bluffing to see who could talk the biggest and say the most.” That claim is inconsistent with his attempt to testify
(2) The evidence is convincing also that Zehmer wrote two agreements, the first one beginning “I hereby agree to sell.” Zehmer
first said he could not remember about that, then that “I don’t think I wrote but one out.” Mrs. Zehmer said that what he wrote was “I
hereby agree,” but that the “I” was changed to “We” after that night. The agreement that was written and signed is in the record
228 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
and indicates no such change. Neither are the mistakes in spelling that Zehmer sought to point out readily apparent. The
(3) If it be assumed, contrary to what we think the evidence shows, that Zehmer was jesting about selling his farm to Lucy and that
the transaction was intended by him to be a joke, nevertheless the evidence shows that Lucy did not so understand it but
considered it to be a serious business transaction and the contract to be binding on the Zehmers as well as on himself. The very
next day he arranged with his brother to put up half the money and take a half interest in the land. The day after that he employed
an attorney to examine the title. The next night, Tuesday, he was back at Zehmer’s place and there Zehmer told him for the first
money that night. Zehmer said that after the writing was signed he laid it down on the counter in front of Lucy. Lucy said Zehmer
handed it to him. In any event there had been what appeared to be a good faith offer and a good faith acceptance, followed by the
execution and apparent delivery of a written contract. Both said that Lucy put the writing in his pocket and then offered Zehmer $5
to seal the bargain. Not until then, even under the defendants’ evidence, was anything said or done to indicate that the matter was
a joke. Both of the Zehmers testified that when Zehmer asked his wife to sign he whispered that it was a joke so Lucy wouldn’t
(4) Defendants contend further, however, that even though a contract was made, equity should decline to enforce it under the
circumstances. These circumstances have been set forth in detail above. They disclose some drinking by the two parties but not to
an extent that they were unable to understand fully what they were doing. There was no fraud, no misrepresentation, no sharp
practice and no dealing between unequal parties. The farm had been bought for $11,000 and was assessed for taxation at $6,300.
Case 11.2
71 Mass.App.Ct. 29, 878 N.E.2d 952
Appeals Court of Massachusetts,Suffolk.
BASISTECHNOLOGYCORPORATION
v.
AMAZON.COM, INC.
impasse. Basis moved to enforce the settlement agreement; Amazon opposed. By affidavit and exhibit material the parties
submitted to the trial judge their e-mail exchange and much of their recorded nisi period communications. After hearing, the trial
judge ruled the e-mail settlement terms to be a valid and binding agreement. She entered judgment in favor of Basis for specific
enforcement of the settlement terms. The judge deleted one term and made minor changes to others. Amazon has appealed.
Background.
1.
The parties’ business relationship.
The procedural history and the following facts emerge from the record and from
$2.72 per share and acquired a seat on Basis’s board of directors. Under the 1999 stock purchase agreement, Amazon acquired
also the right to convert its preferred stock into common stock by use of a conversion ratio of one-to-one.
The 1999 stock purchase agreement provided Amazon with certain antidilution rights, set out in detail in Basis’s certificate of
FN1. The antidilution formula operated by means of a complex fraction. Its precise mechanics are not material to decision
of the appeal.
In April of 2001, Amazon consented to an amendment to Basis’s certificate of incorporation. The amendment enabled a
recapitalization of Basis. It revised Amazon’s “conversion price” to $1.36 per share of Series A preferred stock and thereby made
FN2. The parties disagree whether Amazon’s consent was required, but the trial judge found consent to be immaterial to
2.
Litigation and report of settlement.
Meanwhile, in May of 2003, Basis began the underlying action against Amazon in the
Superior Court upon claims of breach of fiduciary duty, quantum meruit, and G.L. c. 93A violations for nonpayment for “out of
FN3. The judge amended the e-mail terms by making certain deletions, which appear in italics. The final judgment
ordered the parties to comply with the settlement terms, as amended.
“From: [Basis counsel]
Sent: Wednesday, March 23, 2005 10:37 PM
To: [Amazon counsel]
Shares, pursuant to the terms and conditions set forth in the Series A Preferred Stock Purchase Agreement dated as of
December 29, 1999.
“3. Amazon shall relinquish all rights held as a holder of Preferred Shares, including but not limited to the right to designate a
member of the Basis Board of Directors.
“4. Basis shall be permitted to resume use of the Amazon name and logo on its website and in its printed marketing material, in
3.
Posttrial communications.
On March 25, Amazon’s counsel sent a facsimile of the first draft of a settlement agreement to Basis’s
counsel. The draft comported with all the terms of the e-mail exchange, and added some implementing and boilerplate terms
(renunciation of any admission of wrongdoing or liability; confidentiality for the terms; confirmation of the authority of the persons
executing the settlement agreement to bind the parties; severability; modification by writing only; and willingness to execute any
additional documents necessary for implementation).
On March 28 and 29, respectively, Basis counsel returned proposed revised drafts. They contained the original e-mail terms, the
implementing terms, and two additional proposals: that Amazon provide written consent to the March, 2004, stock issuance to In–
Q-Tel; and that Amazon consent to an upcoming further issuance of stock to In-Q-Tel in 2005. On March 31, Amazon expressed
an interest in deleting the second paragraph of the original e-mail proposal, which called for Amazon to convert its Series A
preferred shares to common shares. On that same day, Basis counsel sent an e-mail to Amazon counsel, stating, inter alia, that
the stock conversion term “must remain a feature of the deal, for the reasons you and I have discussed.” Amazon counsel then
replied, “[W]hat would it **958 take to forego [
sic
] conversion e.g., more $ $ outright? ? [A] bigger coupon?[ ] [S]ince I am anxious
4.
The trial judge’s decision.
After hearing and examination of all materials, the judge FN4 ruled that the e-mail exchange constituted
232 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
FN4. The same judge presided over the trial and over the posttrial motion for enforcement of the settlement.
Discussion.
Amazon appeals upon two grounds: (1) that the judge, as a matter of law, incorrectly ruled that the e-mail exchange
created a complete and unambiguous agreement; and (2) that the judge, as a matter of fact finding, incorrectly *36 determined that
Amazon had intended to be bound by the e-mail terms at the time of their exchange.
FN5. In its original brief Amazon characterizes the enforcement decision of the trial judge entirely as a ruling of law. In its
reply brief Amazon acknowledges the question of intent as a factual issue governed on appeal by the standard of clear
error. Since both parties have argued for review of the judge’s factual findings under the “clearly erroneous” test of rule
52(a), we apply that standard.
[6][7] 2.
Interpretation of the e-mail communication as a matter of law.
We examine the text of the terms for the incompleteness
and indefiniteness charged by Amazon. Provisions are not ambiguous simply because the parties have developed different
interpretations of them. See
Suffolk Constr. Co. v. Lanco Scaffolding Co.,
47 Mass.App.Ct. 726, 729, 716 N.E.2d 130 (1999);
Quinn v. Mar-Lees Seafood, LLC,
69 Mass.App.Ct. at 695, 871 N.E.2d 511. Genuine ambiguity requires language “susceptible of
more than one meaning [so that] reasonably intelligent persons would differ as to which *37 meaning is the proper one.”
Ibid.,
quoting from
Citation Ins. Co. v. Gomez,
426 Mass. 379, 381, 688 N.E.2d 951 (1998).
[8] a.
The references to further writings and action.
As indication of incompleteness, Amazon points to references in the March 23
e-mail (i) that the parties “will take all reasonable steps to memorialize [the terms] in a written agreement”; (ii) that duly authorized
individuals will sign the subsequent writing; (iii) that details of the removal of Basis from any Amazon “blacklist” will appear in the
settlement agreement; and (iv) that the settlement agreement will provide further clarity as to the matter of mutual comprehensive
releases.
CHAPTER 11: AGREEMENT 233
Amazon does not dispute that it had received notice of the terms of the In-Q-Tel issuance (466,827 shares of Basis Series B
preferred stock at the price of $1.39 per share) in March of 2004 by memorandum from Basis’s corporate secretary; and that it had
conducted pretrial discovery of that issuance in this litigation. However, Amazon maintains that Basis had never provided an
objective valuation substantiating the price of $1.39 per share as fair market value and as the actual price paid by In-Q-Tel.
(Amazon suspected Basis of providing In-Q-Tel a favorable below-market price as part of the over-all transaction establishing In-Q-
appraisal and of increased value attributable to the project itself created a sufficiently definite term in a setting of inevitable
uncertainties). “If parties specify formulae and procedures that, although contingent on future events, provide mechanisms to
narrow present uncertainties to rights and obligations, their agreement is binding.”
Ibid.
Amazon had actual or chargeable
knowledge of the antidilution conversion formula and its ingredient data when it agreed to the stock conversion settlement term.
Amazon’s objection is that it distrusted the data. As the trial judge observed, however, Amazon could have and should have
investigated the data to its satisfaction before its agreement to end the trial. If Amazon had remained genuinely suspicious, it could
have declined that settlement term or the settlement altogether. The e-mail term promised the use of the conversion process, and
not any specific resulting ratio or ownership share. Amazon accepted that process. As a matter of law, the stock conversion term is
FN6. See especially
Carver v. Waldman,
21 Mass.App.Ct. 958, 959, 488 N.E.2d 427 (1986), in which a party attempting
to rescind a settlement agreement claimed that “a feature of the agreement was predicated on a mutual belief as to the
value of corporate securities to be used to adjust interests,” but failed to “support with evidence either the existence of the
predicate, or the materiality or injustice of the alleged deviation from it.” Similarly, here, Amazon is asserting an expected
particular value from the conversion formula as a predicate of the settlement agreement. The evidence shows only that
45-46, 577 N.E.2d 283 (1991). The essential circumstance of this disputed agreement is that it concluded a trial. In the course of
its original and reply briefs, Amazon characterizes the e-mail exchange as a *42 “framework” causing the “suspen[sion]” of the trial
and forming a “starting point” toward a “final settlement.”
(1984) (once the parties indicated to the judge that they had entered into a settlement agreement with the express intention of
reducing the agreement to writing, the agreement became binding even in the absence of a formal signed agreement);
Carver v.
Waldman,
21 Mass.App.Ct. 958, 960, 488 N.E.2d 427 (1986) (“where a settlement, agreed to by parties represented by counsel, is
offered to a judge to be embodied in a judgment, and it appears desirable that the settlement be given the force of a judgment, the
CHAPTER 11: AGREEMENT 235
FN7. Under the principle of judicial estoppel a party may not successfully maintain a position in one court and thereafter
repudiate or contradict that position in the same proceeding or in separate proceedings in that or other courts. See
Paixao
v. Paixao,
429 Mass. 307, 308-311, 708 N.E.2d 91 (1999);
Otis v. Arbella Mut. Ins. Co.,
443 Mass. 634, 639-642, 824
N.E.2d 23 (2005). See also
Chiao-Yun Ku v. Framingham,
53 Mass.App.Ct. 727, 729, 762 N.E.2d 855 (2002);
FN8. Those resources will include the work of the judge, the session clerk, a judicial clerk, a court reporter, court officers,
and the preparation and attendance of witnesses local and distant. The court’s reliance will extend to the scheduling of
oncoming trials and their many participants. This instance was a bench trial. Naturally a jury trial would expand the public
FN9. See
Points East, Inc. v. City Council of Gloucester,
15 Mass.App.Ct. 722, 726, 448 N.E.2d 1268 (1983), in which
this court made the same observation about equivocal use of the appellate process.
Upon notice of a settlement, as here, the Massachusetts trial court typically enters an order of “dismissal nisi.” “Nisi” in
its root Latin sense means “unless.” Literally the court is determining that the litigation has ended “unless” the parties
FN10. Amazon argues that the judge’s deletion of the sixth and final e-mail provision for comprehensive mutual releases
acknowledges the incomplete and nonbinding character of the e-mail agreement. The judge did not elaborate upon this
modification in the declaratory final judgment. The tenor of her memorandum of decision leaves no doubt that the
Case 11.3
La.App. 3 Cir.,2010.
Alexander v. Lafayette Crime Stoppers, Inc.
28 So.3d 1253, 2009-927 (La.App. 3 Cir. 2/3/10)
Court of Appeal of Louisiana,
the following reasons, we affirm.
Factual and Procedural Background
In the summer of 2002, after several South Louisiana women had been murdered, the Multi Agency Homicide Task Force (Task
Force) was established to investigate these murders, believed to be committed by the same individual referred to as the South
Louisiana Serial Killer. In April 2003, the Baton Rouge Crime Stoppers (BCS) began publicizing a reward offer in newspapers,
with the Lafayette Sheriff’s Department, who in turn shared the information with the Task Force.
On May 22, 2003, Ms. Alexander was interviewed by an FBI agent assisting the Task Force. Based upon that interview, a
composite sketch was drawn and released to the public on May 23, 2003. Investigators believed the composite sketch matched the
description of a possible suspect in an investigation being handled by the Louisiana Attorney General’s Office and the Zachary
Police Department. On May 25, 2003, a photo lineup was prepared and presented to Ms. Alexander, who identified her attacker as
that acceptance of the reward must be done through the Crime Stoppers’ tipline.
Discussion
Summary Judgment
Louisiana Code of Civil Procedure Article 966(B) provides, in part, that summary judgment “shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
Contract
[1] Louisiana Civil Code Article 1927 provides:
A contract is formed by the consent of the parties established through offer and acceptance.
Unless the law prescribes a certain formality for the intended contract, offer and acceptance may be made orally, in writing, or
by action or inaction that under the circumstances is clearly indicative of consent.
information relating to the murders of five south Louisiana women. A $25,000 reward offer by Lafayette Crime Stoppers has
been matched through commitments from Chamber members
In order to qualify for the reward, the tipster must p[r]ovide information which leads to the ar[r]est, DNA match, and the formal
filing of charges against a suspect through grand jury indictment or Bill of Information. In addition, the qualifying tip must be
received prior to midnight, August 1, 2003. Investigators with the Serial Killer Task Force have expressed optimism that a large
offeror.” Acceptance is received when it comes into the possession of a person authorized by the offeror to receive it, or when it is
deposited in a place the offeror has indicated as the place where communications of that kind are to be deposited for him.
See
La.Civ.Code art. 1938;
Kent v. Hogan,
03-2424 (La.App. 1 Cir. 10/29/04), 897 So.2d 68.
[3] The plaintiffs argue that there is a genuine issue of material fact as to whether they accepted the Crime Stoppers’ reward offers;
however, the plaintiffs admit that they did not contact either Crime Stopper organization before August 1, 2003. The plaintiffs argue
Stopper organization. While acceptance may be valid if customary in similar transactions, according to La.Civ.Code art. 1936, it
must be “customary in similar transactions at the time and place the offer is
received.
” (Emphasis added.) As indicated above,
there is no evidence in the record that the defendants received any acceptance of the offer. Accordingly, no contract was formed
between the parties. La.Civ.Code art. 1927.
DECREE