More adventures in business contracts PDF Print E-mail

Having been a business lawyer for over 25 years, I never cease to marvel at the complexity of contracts, and also at many interesting cases that provide support to the adage that “truth is stranger than fiction." (I also want to mention that nothing in this article should be construed as legal advice.)

 

Certain contracts have to be in writing. The New York Court of Appeals (New York’s highest court) nullified an attempt to avoid the Statute of Frauds (which requires certain types of contracts to be in writing) by alleging an implied contract remedy in quantum meruit (an equitable formula for determining how much to award to one who has provided goods or services to another, based on the reasonable value of such goods or services) and unjust enrichment. In Snyder v. Bronfman, the plaintiff alleged that plaintiff and the defendant ran into each other in the Caribbean, that it was agreed orally that plaintiff would function as defendant’s “experienced right hand," "principal advisor" and "consigliere" and that defendant assured plaintiff that plaintiff would be able to share in the proceeds of any consummated transaction without putting up any of his own funds, and guaranteed that plaintiff would receive a share of the value created that would be fair and equitable.

An acquisition deal came to fruition with plaintiff’s efforts being instrumental by identifying the opportunity. Plaintiff also tried to do a merger deal but that deal collapsed; however, the acquisition did close. Defendant invited plaintiff to invest in the acquired company, and plaintiff invested $1.3 million. However, defendant thereafter told plaintiff that there was no room for him at the company and refused plaintiff’s request for "a lot of money” for plaintiff’s contribution to the transaction. Plaintiff sued defendant based on various causes of action including under the alleged contract with defendant and also based on the implied contract that plaintiff claimed he had with defendant which entitled him to recovery under quantum meruit and unjust enrichment.

The lower court dismissed all of the plaintiff’s claims except plaintiff’s Implied contract claims because the alleged agreement was too vague and was unenforceable, but held that the statute of frauds (requiring contracts to be in writing) was inapplicable and that plaintiff was entitled to the reasonable value of his services rendered under a theory of quantum meruit and unjust enrichment. The Court of Appeals held that plaintiff was not entitled to compensation because under New York’s General Obligations Law, Section 5-701(a)(10) (statute of frauds), “a contract to pay compensation for services rendered … in negotiating the purchase, sale …of a business opportunity, business…” must be in writing. The Court of Appeals found that the plaintiff was “seeking compensation for services rendered in finding and negotiating a business opportunity." Said the Court of Appeals, “[T]he question is whether plaintiff is now seeking compensation for services rendered in finding and negotiating a business opportunity. He is." That meant that the contract had to be in writing and it was not.

Suit against psychic in New Jersey. In New Jersey, a woman sued her psychic for the return of $160,000 she paid the psychic in cash and gifts based on the psychic’s undertaking that she could lift the dark forces that would help the plaintiff find new romance, reconcile her with her husband and even cure her of cancer. When the psychic’s promises failed to come true, she sued for the return of the $160,000.

No suits in New York for alienation of affection or breach of contract to marry. Can a spurned wife sue her husband’s mistress for ruining their marriage? Not in New York, where the New York Civil Rights Law, Section 80-a prohibits causes of action for alienation of affection and breach of contract to marry. In North Carolina, however, a jury awarded a plaintiff $9 million dollars as damages from her husband’s mistress ($5 million compensatory damages and $4 million in punitive damages) for breaking up her 33 year marriage. North Carolina is one of only seven states in the US that still allows an action for alienation of affection.