Opinion ID: 773212
Heading Depth: 2
Heading Rank: 2

Heading: Enforceability of Agreements to Negotiate

Text: 10 General Dynamics contends on appeal that the judgment may be upheld on an alternate ground that was also argued before the district court: that the agreement to negotiate is unenforceable under California law. We note the possibility that agreements to negotiate may be unenforceable as a matter of law in California. See, e.g., Beck v. Am. Health Group Int'l, Inc., 260 Cal. Rptr. 237, 242 (Ct. App. 1989); Carter v. Milestone, 338 P. 2d 569, 573 (Cal. Ct. App. (1959); Smissaert v. Chiodo, 330 P.2d 98, 101 (Cal. Ct. App. 1958); Forgeron Inc. v. Hansen, 308 P.2d 406, 412 (Cal. Ct. App. 1957); Columbia Pictures Television v. Krypton Broad. of Birmingham, Inc., 106 F.3d 284, 291 (9th Cir. 1997). Significantly, all of these cases involved attempts to enforce the underlying substantive contract, and do not directly address whether an agreement to negotiate is unenforceable in its own right. 11 However, certain language from these cases, when taken out of context, also can be read to suggest that an agreement to negotiate in itself may not be enforceable. See, e.g., Carter, 170 Cal. App. 2d at 189 (It is, of course, elementary that a writing which is intended by the parties to be a mere memorandum of intention to negotiate a contract and which does not purport to state the essentials of a proposed agreement is unenforceable.); Beck, 211 Cal. App. 3d at 1562 (Preliminary negotiations or an agreement for future negotiations are not the functional equivalent of a valid, subsisting agreement). Furthermore, no California court has affirmatively held that agreements to negotiate are enforceable, even for reliance damages. But cf. Racine v. Laramie, Ltd., Inc. v. Dep't of Parks & Rec., 14 Cal. Rptr. 2d 335, 340-41 (Ct. App. 1992) (The fact that parties commence negotiations looking to a contract, or to the amendment of an existing contract, does not by itself impose any duty on either party not to be unreasonable or not to break off negotiations, for any reason or no reason. During the course of negotiations things may be done which do then impose a duty of continued bargaining only in good faith. . . . For instance . . . . in anticipation of an agreement the parties may, by letter of intent or otherwise, agree that they will bargain in good faith for the purpose of reaching an agreement.). In light of the unsettled nature of California law on this point, we fortunately are able to resolve this case on the alternate ground specified by the district court.