Opinion ID: 1176472
Heading Depth: 3
Heading Rank: 5

Heading: The Making of the Contract Certainty and Manifestation of Assent

Text: The requirement of reasonable certainty of terms arises from the inescapable fact that the uncertainty of the promises may indicate that a proposal or acceptance was not intended to be understood as a binding offer or acceptance. Restatement § 33(3). It follows that reasonable certainty is important as a factor in determining whether the parties intended to make a binding offer and acceptance. Id. Thus, with regard to Diethrich's assertion that his arrangement with Schade was merely an agreement to agree, evidencing no intent to be bound, we turn again to the Restatement: The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance. Restatement § 33(3). ... But the actions of the parties may show conclusively that they have intended to conclude a binding agreement, even though one or more terms are missing or are left to be agreed upon. In such cases courts endeavor, if possible, to attach a sufficiently definite meaning to the bargain. Id. comment a (emphasis added). The Restatement attempts to report settled principles of law. Section 33 is no exception. Its description of the operative facts sufficient to create a contract were enunciated by the United States Supreme Court as early as 1891. Joy v. City of St. Louis, 138 U.S. 1, 11 S.Ct. 243, 34 L.Ed. 843 (1891), involved a contract under which a railroad company claimed the right to use a certain portion of tracks constructed by another  the Wabash company. The first company based its claim upon a contract which provided in part that the Wabash company shall permit, under such reasonable regulations and terms as may be agreed upon, other railroads to use its right of way through the park, ... upon such terms, and for such fair and equitable compensation to be paid to it therefor, as may be agreed upon by such companies. Id. at 5-6, 11 S.Ct. at 246 (emphasis added). The Wabash company's successors challenged a federal circuit court's decree upholding the enforceability of this provision. Like Diethrich, the company claimed that the agreement was an agreement to agree  not sufficiently definite to be enforced by a court of equity. Id. at 29, 11 S.Ct. at 250. Soundly rejecting this argument, the Supreme Court stated: Paragraph 9 [the provision at issue] is imperative. It provides that the [Wabash Company] shall permit other railroads to use its right of way. This is to be done under such reasonable regulations and terms as may be agreed upon, and upon such terms and for such fair and equitable compensation ... as may be agreed upon by such companies. Not only are the regulations and terms to be reasonable, but the compensation is to be fair and equitable. Although the statement is that the compensation is to be such as may be agreed upon by such companies, yet the statement that it is to be fair and equitable plainly brings in the element of its determination by a court of equity. If the parties agree upon it, very well; but if they do not, still the right of way is to be enjoyed upon making compensation, and the only way to ascertain what is a fair and equitable compensation therefor is to determine it by a court of equity. Such is, in substance, the agreement of the parties. The provision cannot be construed as meaning that, if the parties do not agree, there is to be no compensation, and that, because there can in that event be no compensation, there is to be no enjoyment of the right of way. In this view, it cannot be said that the court is making an agreement for the parties which they did not make themselves. Id. at 43, 11 S.Ct. at 255 (citations omitted). See also Henderson Bridge Co. v. McGrath, 134 U.S. 260, 275-76, 10 S.Ct. 730, 735, 33 L.Ed. 934 (1890) (holding a promise to do what was right enforceable so long as it was made with contractual intent); Brennan v. Employers' Liability Assurance Corp., 213 Mass. 365, 367, 100 N.E. 633, 634 (1913) (holding that a promise to make it right did not fail for indefiniteness since [j]uries are constantly solving such problems); Noble v. Joseph Burnett Co., 208 Mass. 75, 82, 94 N.E. 289, 289-90 (1911) (upholding the enforceability of a promise to pay a fair and equitable share of the net profits as neither so indefinite nor so impracticable that it cannot be applied with reasonable certainty); 1 A. CORBIN, CORBIN ON CONTRACTS § 95, at 400 (1963) (If the parties have concluded a transaction in which it appears that they intend to make a contract, the court should not frustrate their intention if it is possible to reach a just and fair result, even though this requires ... the filling of some gaps that the parties have left); Restatement § 33 comment e (where the parties intend to conclude a contract for the rendition of services and the price is left to be agreed by the parties and they fail to agree, the price is a reasonable price). But see, e.g., Varney v. Ditmars, 217 N.Y. 223, 111 N.E. 822 (1916) (holding a promise to pay a fair share of my profits too vague to furnish a right of action, a result from which Justice Cardozo dissented). We find Diethrich's promise in the present action no less definite than the Wabash Company's promise in Joy. The record strongly supports the trial court's finding (Finding of Fact No. 10) that Diethrich's offer and Schade's acceptance were made with contractual intent. The fact that one of [the parties], with the knowledge and approval of the other, has begun performance is nearly always evidence that they regard the contract as consummated and intend to be bound thereby. 1 A. CORBIN, supra § 95, at 407 (emphasis added). See also Restatement § 34(2) (part performance under an agreement may establish that a contract enforceable as a bargain has been formed). If part performance can furnish evidence of intent to make a contract, then rendition and acceptance of a party's full performance must be an even more compelling basis to enforce that agreement. In this case, both Schade and Diethrich began performing within days of making the contract. Having accepted Diethrich's offer by resigning his former position on November 17, 1982, Schade undertook his newly defined duties for the Congress the next day. According to the terms of his agreement with Diethrich, he continued to perform these duties in support of the Congress through March 6, 1983. Diethrich, for his part, attended the Foundation's board meeting on December 22, 1982 to personally request the appointment of the committee that would formulate Schade's severance package. By these acts the parties clearly manifested their joint understanding that they were bound by their promises. In view of this, it cannot be said that the trial court made an agreement for the parties which they did not make themselves. See Joy, 138 U.S. at 43, 11 S.Ct. at 255; cf. Pyeatte and Edwards, where the facts of each case created doubt as to the parties' intent to be bound. [9] Any requirement of reasonable certainty is satisfied if the agreement that was made simply provides a basis for determining the existence of a breach and for giving an appropriate remedy. Restatement § 33(2). Unlike Joy, moreover, in the case before us the trial court did not need to take upon itself the task of filling the gaps in the parties' agreement and designing an appropriate remedy. It had, instead, the opinion of experts mutually selected by Diethrich and Schade. The Committee to which they turned to recommend a fair and equitable severance agreement was composed of businessmen familiar with personnel practices involving senior executives. Assuming they acted in good faith, Diethrich and Schade impliedly agreed to accept the Committee's recommendation if they found it fair and equitable. Here, as in Joy, if the parties could agree upon what was fair and equitable, then very well; but if they [did] not, then the Committee's recommendation might be agreed upon, but if not, then what was to be fair and equitable compensation ... [would be] determine[d] ... by a court of equity. The parties did not agree upon fair and equitable severance compensation, nor did they agree upon the Committee's recommendation. The trial court found, however, that that recommendation was fair and equitable and adopted it. Finding of Fact No. 15. The trial court's finding was supported by credible evidence, and we, in turn, are bound by the trial court's finding. See Rule 52(a), Ariz.R. Civ.P., 16 A.R.S.; State ex rel. LaSota v. Arizona Licensed Beverage Assn, 128 Ariz. 515, 627 P.2d 666 (1981); Bevins v. Dickson Electronics Corp., 16 Ariz. App. 105, 107, 491 P.2d 494, 496 (1971). We hold that Diethrich and Schade made a bargain for a consideration, that the record supports the trial court's finding that the parties intended to be bound and manifested that intention. We hold, further, that the contract thus formed was capable of enforcement. We affirm that portion of the judgment which awarded Schade damages of $73,500 as the Institute's unpaid portion of severance pay, and $3,500 as other severance benefits.