Court Opinion

ID: 9465495
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:47:49.793922+00
Date Added: 2024-06-11T17:39:12.543190
License: Public Domain

FRIENDLY, Circuit Judge,
concurring:
The difficulty in deciding this case comes from the gap between the realities of the formation of complex business agreements and traditional contract formulation. The nature of the gap is well described in a passage in 2 Schlesinger (ed.), Formation of Contracts: A Study of the Common Core of Legal Systems 1584-86 (1968), reprinted in Farnsworth, Young and Jones, Cases and Materials on Contracts (2d ed. 1972) at 99-100, which is reproduced in the margin.1 Under a view conforming to the realities of business life, there would be no contract in *58such cases until the document is signed and delivered; until then either party would be free to bring up new points of form or substance, or even to withdraw altogether. However, I cannot conscientiously assert that the courts of New York or, to the extent they have not spoken, the Restatement of Contracts 2d § 26 and comment C (Tent. Drafts 1-7 Revised and Edited) have gone that far, nor can I find a fair basis for predicting that the New York Court of Appeals is yet prepared to do so.
On the other hand, it does seem to me that the New York cases cited by the majority can be read as holding, or at least as affording a fair basis for predicting a holding, that when the parties have manifested an intention that their relations should be embodied in an elaborate signed contract, clear and convincing proof is required to show that they meant to be bound before the contract is signed and delivered. Such a principle would accord with what I believe to be the intention of most such potential contractors; they view the signed written instrument that is in prospect as “the contract”, not as a memorialization of an oral agreement previously reached. Also, from an instrumental standpoint, such a rule would save the courts from a certain amount of vexing litigation. The clear and convincing proof could consist in one party’s allowing the other to begin performance, as in Viacom International, Inc. v. Tandem Productions, Inc., 526 F.2d 593 (2d Cir. 1975) and V’Soske v. Barwick, 404 F.2d 495 (2 Cir. 1968), cert. denied, 394 U.S. 921, 89 S.Ct. 1197, 22 L.Ed.2d 454 (1969), or in unequivocal statements by the principals or authorized agents that a complete agreement had been reached and the writing was considered to be of merely evidentiary significance.
The facts forcefully marshalled by Judge Lumbard make a strong case for finding that the latter condition has been satisfied here. What weighs especially with me is Kirsch’s letter of October 26, not claimed to have been unauthorized, saying that “Teleprompter now wishes to settle the litigation only with respect to Teleprompter on the terms which had been agreed upon with respect to Teleprompter” in the earlier three-party settlement “and I understand that this is agreeable with ITC”. From then on the job of transforming the three-party agreement into a two-party one was largely scrivener’s work and Teleprompter manifested no dissatisfaction with Kirsch’s performance of this. Upon the understanding that our decision rests on the unique facts here presented and that we are not entering a brave new world where lawyers can commit their clients simply by communicating boldly with each other, I concur in the judgment of affirmance.

. “Especially when large deals are concluded among corporations and individuals of substance, the usual sequence of events is not that of offer and acceptance; on the contrary, the businessmen who originally conduct the negotiations, often will consciously refrain from ever making a binding offer, realizing as they do that a large deal tends to be complex and that its terms have to be formulated by lawyers before it can be permitted to become a legally enforceable transaction. Thus the original negotiators will merely attempt to ascertain whether they see eye to eye concerning those aspects of the deal which seem to be most important from a business point of view. Once they do, or think they do, the negotiation is then turned over to the lawyers, usually with instructions to produce a document which all participants will be willing to sign. When the lawyers take over, again there is no sequence of offer and acceptance, but rather a sequence of successive drafts. These drafts usually will not be regarded as offers, for the reason, among others, that the lawyers acting as draftsmen have no authority to make offers on behalf of their clients. After a number of drafts have been exchanged and discussed, the lawyers may finally come up with a draft which meets the approval of all of them, and of their clients. It is only then that the parties will proceed to the actual formation of the contract, and often this will be done by way of a formal ‘closing’ . . or in any event by simultaneous execution or delivery in the course of a more or less ceremonial meeting, of the document or documents prepared by the lawyers.”