Opinion ID: 162593
Heading Depth: 2
Heading Rank: 1

Heading: the datarede agreement

Text: 20 LanCompany argues the district court erred in granting summary judgment on its claim Novell breached the DataRede Agreement. 4 The DataRede Agreement claim is based on a February 7, 1990 letter from Novell's director of new business development to DataRede. Prior to the letter, DataRede had, under the direction of Novell, conducted similarity tests necessary to allow Novell to distribute NetWare in Brazil. After the completion of the similarity tests, Novell sent the February letter promising a license to build network interface cards with no up-front fee. LanCompany refers to this letter as the DataRede Agreement. 21 Specifically, the letter states: Novell has agreed to the following measures as recognition of DataRede's special contribution to the registration and approval of NetWare.... No up-front fee for NE1000 & NE2000. NE1000 and NE2000 are network interface cards. They are essentially hardware that allows a computer to communicate with a network. Although Novell had the technology for these cards, it typically licensed the technology to other hardware manufacturers rather than producing the cards itself. LanCompany contends Novell breached the Agreement by failing to deliver the license. 22 The district court granted summary judgment in favor of Novell, concluding there was no contract because there was no consideration for the letter. The court found there was no consideration for the claimed contract because the benefits granted by the letter were past consideration for DataRede's earlier participation in the Brazilian registration process, a process completed two months before the ... [l]etter. Furthermore, the court said even if the letter was an agreement, the evidence is that Novell did comply with the terms of the letter. The district court later denied a request for rehearing on this issue. 23 LanCompany argues there was sufficient consideration for an enforceable contract because the parties had intended Novell to compensate DateRede for its participation in the similarity test. LanCompany explains [e]ven though the DataRede Agreement is dated after the similarity test, Novell's promises that were memorialized in the document were not made independent of DataRede's promised performance. LanCompany claims DateRede, therefore, had a claim for its efforts, and even if the claim for a reward might not have been enforceable, the surrender of its claim in exchange for the DataRede Agreement was sufficient consideration for the contract. Although LanCompany does not specifically mention accord and satisfaction, it directs us to accord and satisfaction cases. 24 Generally, past services cannot serve as consideration for a subsequent promise. DeMentas v. Estate of Tallas ex rel. First Security Bank, 764 P.2d 628, 633 (Utah Ct.App.1988) (Events which occur prior to the making of the promise and not with the purpose of inducing the promise in exchange are viewed as `past consideration' and are the legal equivalent of `no consideration.'); Jensen v. Anderson, 24 Utah 2d 191, 468 P.2d 366, 368 (1970) (Past services, when rendered under ... circumstances as to create no legal liability, are not consideration for a subsequent promise (citations omitted).). Utah law does, however, enforce a subsequent promise based on completed services when the completed service was not meant to be gratuitous and the subsequent promise meets the requirements of an accord and satisfaction. See England v. Horbach, 905 P.2d 301, 304 (Utah Ct.App.1995), rev'd on other grounds, 944 P.2d 340, 344 (Utah 1997); Jensen, 468 P.2d at 368 n. 6. A party seeking to prove an accord and satisfaction must show (1) an unliquidated claim or a bona fide dispute over the amount due; (2) a payment offered as full settlement of the entire dispute; and (3) an acceptance of the payment as full settlement of the dispute. ProMax Dev. Corp. v. Raile, 998 P.2d 254, 259 (Utah 2000). 25 We are not persuaded by LanCompany's arguments. The DataRede Agreement lacks sufficient consideration to constitute an enforceable contract. LanCompany readily admits DataRede completed the registration tests before Novell sent the letter allegedly creating the DataRede Agreement. Although LanCompany's brief suggests the letter simply memorialized promises made prior to the completion of the registration tests, there is no evidence in the record to support this suggestion. Viewed in the light most favorable to LanCompany, the record merely reveals testimony the parties expected DataRede would receive some compensation. But, the parties had not agreed upon the terms of DataRede's compensation before Novell sent the February 7, 1990 letter. We, therefore, will enforce the promises in the letter only if they meet the requirements of an accord and satisfaction. 26 Even assuming LanCompany is correct in its assertion there was a dispute as to the compensation Novell owed LanCompany for conducting the similarity tests, we cannot conclude the DataRede Agreement amounts to an enforceable accord and satisfaction. In this case, LanCompany needed to show the agreement was in satisfaction of the dispute. See ProMax Dev., 998 P.2d at 259. But, there is no indication DataRede or LanCompany ever surrendered any of its potential claims against Novell. In fact, the letter embodying the DataRede Agreement shows the Agreement was not in satisfaction of any claims. As the letter itself explains: 27 In the course of events, DataRede made special requests to Novell.... These requests were made without prior agreements, and, in some cases, without a precise definition of the scope or [sic] the request. Some of the requests have been granted, others have been subject to negotiation, and still others must be further defined. 28 As the letter states, negotiations were still underway concerning DataRede's requests made incident to the registration tests. Furthermore, LanCompany does not direct us to any other evidence suggesting the DataRede Agreement was reached in satisfaction of any claims or in full settlement of any dispute. There is simply no evidence to support LanCompany's contention it surrendered potential claims against Novell to receive the benefits in the February 1990 letter. Consequently, the alleged DataRede Agreement fails for lack of consideration. 29 Because we conclude the promises in the letter lack consideration, we need not consider whether Novell breached the alleged agreement. The district court was correct in granting summary judgment on the breach of the DataRede Agreement claim. 30