Opinion ID: 1196085
Heading Depth: 4
Heading Rank: 1

Heading: The Language of the Agreement

Text: We begin, as we usually do, with the language of the agreement. In particular, we ask whether the agreement expressly states that the parties will not be bound in the absence of a further, definitive written instrument. See Brown v. Cara, 420 F.3d 148, 154 (2d Cir.2005); Adjustrite, 145 F.3d at 549. We find no such reservation here. The April 9 agreement is six pages long and titled a letter agreement. It is not a proposal, a draft, an expression of desires, or a memorandum of understanding. Cf. Brown, 420 F.3d at 154 (two-page memorandum of understanding held not to be a type I preliminary agreement); Adjustrite, 145 F.3d at 549 (two-page proposal that stated desires held nonbinding); Winston v. Mediafare Entm't Corp., 777 F.2d 78, 81 (2d Cir.1985) (proposed agreement held nonbinding). Neither did the April 9 agreement speak in decidedly non-committal language suggesting, at most, a promise to `work together.' Brown, 420 F.3d at 154. Rather, it specified, in considerable detail, the performance that it required of each party. Just as importantly, it specified in equal detail what would become of the virtual lymph node technology if CCC were unable to obtain financing by May 1, and thus unable to purchase Immunotherapy's stock on June 1. Immunotherapy asks us to place great weight on the fact that the agreement reads, [s]ubject to the terms and conditions hereof, it is presently contemplated that [CCC] would purchase the 50,000 shares ... for an aggregate purchase price of $1,000,000, rather than, for example, it is agreed that CCC would do so, subject to financing. In Immunotherapy's view, the words presently contemplated clearly manifest the parties' intent not to be bound. We disagree. To be sure, a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract. Restatement (Second) of Contracts § 21 (1981). The phrase presently contemplate, however, is not such a manifestation. Cf. id. § 21 cmt. b, illus. 3-4 (statements that an instrument `constitutes no contract,' `confers no legal right,' or is not to be a legal agreement or subject to legal jurisdiction in the law courts negate binding obligations). Every contract that calls for future performance contemplates that performance, and every such contract speaks of the parties' present intentions at the time they enter into it. In this context, it is clear that contemplate means anticipate doing or performing, plan on, and intendnot view mentally with continued thoughtfulness or muse or ponder about. Webster's Third New International Dictionary 491 (2002). Even a brief survey of publicly available transaction agreements confirms the ubiquitous use of phrases such as transaction contemplated by this Agreement in written instruments of sale and acquisition. See, e.g., Millennium Pharms., Inc., Current Report (Form 8-K) ex. 2.1 (Apr. 10, 2008), available at http://www.sec.gov/ Archives/edgar/data/1002637/XXXXXXXXXXXX 004416/a2184684zex-2_1.htm (transactions contemplated by this Agreement, transactions contemplated hereby, and similar phrases used twenty-two times in Takeda Pharmaceutical's agreement to acquire Millennium Pharmaceuticals); Bear Stearns Cos., Current Report (Form 8-K) ex. 2.1 (Mar. 20, 2008), available at http:// www.sec.gov/Archives/edgar/data/19617/ XXXXXXXXXXXXXXXXXX/mergeragreement2. htm (sixty times in JPMorgan Chase's agreement to acquire Bear Stearns); Int'l Paper Co., Current Report (Form 8-K) ex. 10.1 (Mar. 24, 2008), available at http:// www.sec.gov/Archives/edgar/data/51434/ XXXXXXXXXXXXXXXXXX/dex101.htm (thirty-one times in International Paper's agreement to purchase several businesses from Weyerhaeuser Co.); ChoicePoint Inc., Current Report (Form 8-K) ex. 2.1 (Feb. 22, 2008), available at http://www.sec.gov/ Archives/edgar/data/1040596/XXXXXXXXX XXXXXXXXX/dex21.htm (sixty-three times in Reed Elsevier Group PLC's agreement to acquire ChoicePoint); Countrywide Fin. Corp., Current Report (Form 8-K) ex. 2.1 (Jan. 17, 2008), available at http://www.sec. gov/Archives/edgar/data/25191/XXXXXXXXXX 08000107/exhibit21.htm (sixty-eight times in Bank of America's agreement to acquire Countrywide). We have no reason to think here that the parties intended to deviate from this established usage. We note, in addition, that courts also have had occasion to use the term contemplate to describe the future performance called for under a binding contract. For example, the doctrine of anticipatory breach allows a contracting party to sue before performance is due if the other party repudiates its contractual duties. N.Y. U.C.C. § 2-610; Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp., 92 N.Y.2d 458, 462-63, 705 N.E.2d 656, 659, 682 N.Y.S.2d 664, 667 (1998). New York courts have described this doctrine as applicable to bilateral contracts which contemplate some future performance. Am. List Corp. v. U.S. News & World Report, Inc., 75 N.Y.2d 38, 44, 549 N.E.2d 1161, 1164, 550 N.Y.S.2d 590, 593 (1989) (emphasis added); accord Gardiner Int'l, Inc. v. J.W. Townsend & Assocs., Inc., 13 A.D.3d 246, 247, 788 N.Y.S.2d 312, 314 (2004) (emphasis added). If contemplate were a magic word that signaled the lack of a binding obligation, then a party could not invoke the doctrine of anticipatory breach on the basis of contemplated performance. One cannot sue based on a repudiation of performance that is not, in fact, required. Our conclusion draws considerable support from the April 9 agreement's drafting history, which we are both permitted and required to consider. See Winston, 777 F.2d at 80-81 (in determin[ing] whether the parties intended to be bound, we consider `correspondence [and] other preliminary or partially complete writings' (quoting Restatement (Second) of Contracts § 27 cmt. c)); Brown Bros. Elec. Contractors, Inc. v. Beam Constr. Corp., 41 N.Y.2d 397, 399-400, 361 N.E.2d 999, 1001, 393 N.Y.S.2d 350, 351-52 (1977); Morgan Servs., Inc. v. Abrams, 21 A.D.3d 1284, 1285, 801 N.Y.S.2d 457, 457-58 (2005). The April 9 agreement was styled a letter agreement, whereas all five previous drafts were styled a summary of discussions or the like. The April 9 agreement was signed by Immunotherapy's chairman, whereas all five previous drafts were not. The April 9 agreement was not followed by any further back-and-forth, whereas all five previous drafts were soon followed by further negotiations. Moreover, the early drafts expressly and conspicuously stated that they were not intended to be binding, but this language is absent from the April 9 agreement. Immunotherapy asks us to consider the presently contemplated language in a vacuum, but this is not how we are to view it. Rather, we look at this language and the April 9 agreement as a whole, in light of the totality of the circumstances, which includes the five prior drafts. See Brown Bros., 41 N.Y.2d at 399-400, 361 N.E.2d at 1001, 393 N.Y.S.2d at 352 (In determining whether the parties entered into a contractual agreement ... disproportionate emphasis is not to be put on any single act, phrase or other expression, but, instead, on the totality of all of these, given the attendant circumstances....). Considering all this, we find it inescapable that the parties meant for the April 9 agreement to be not a summary of discussions, but a binding expression of their intent with regard to the transfer of Immunotherapy's AVT stock.