Mr. Mark Corp. v. Rush, Inc.

• Decision Date: 21 July 1983
• Docket Number: No. 45936,45936
• Citation: 11 OBR 259,464 N.E.2d 586,11 Ohio App.3d 167
• Parties: , 11 O.B.R. 259 MR. MARK CORPORATION, Appellee, v. RUSH, INC. et al., Appellants.
• Court: Ohio Court of Appeals

Page 167

11 Ohio App.3d 167

464 N.E.2d 586, 11 O.B.R. 259

MR. MARK CORPORATION, Appellee, v. RUSH, INC. et al., Appellants.

No. 45936.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

July 21, 1983.

Syllabus by the Court

1. An agreement is enforceable if it encompasses the essential elements of the bargain. Omission of less central subjects leaves those matters for later agreement or judicial resolution according to accepted legal principles.

2. An agreement is sufficiently certain for enforcement if it provides a basis for determining the existence of a breach and for giving an appropriate remedy.

George Braun, Cleveland, for appellee.

Mr. Eugene Stevens, Cleveland, for appellants.

MARKUS, Presiding Judge.

Defendant corporation and its president appeal from a trial court judgment ordering specific performance of a contract for the sale of their restaurant business. They claim that the alleged contract was only a preliminary agreement in the course of negotiations, that its terms were too vague and uncertain for enforcement, and that the trial court's equitable order improperly directed action beyond the purported agreement. They also argue that the plaintiff corporation failed to establish its right to enforce the alleged contract as an assignee of the original contracting party. We disagree with those contentions, so we affirm the trial court's judgment. ¹

On January 6, 1982, plaintiff's alleged assignor (Mark Figetakis) and defendant's president and sole stockholder (Charles Rushefski) signed a realtor's "Purchase Agreement" for a Strongsville restaurant in leased premises and "all outstanding capital stock" of the defendant-corporation for $90,000. The sales agent for defendants' broker completed that single page printed form with handwritten terms before the parties signed it, and he signed as a witness to each of their signatures. In its totality the document contains approximately eight hundred words in seventeen numbered paragraphs, six unnumbered paragraphs, and titles for different segments. The body of that document is set forth in the Appendix to this opinion.

At the nonjury trial, plaintiff's principals (Mark Figetakis and Eleseos Markos) testified that they considered the "Purchase Contract" to be a binding contract. Defendant's president and its sales agent (Herbert Atwell) testified that they considered it to be a preliminary document which was the basis for later more concrete terms.

No one claimed and no witness testified that anyone contemplated a replacement document which would incorporate all the terms of the sale. However, all witnesses described further negotiations conducted by the signatories and their representatives until the end of The defendants argue that those negotiations were essential to a complete agreement, and that the parties' failure to reach agreement on additional terms precluded any binding contract. Plaintiff contends that the later negotiations sought to implement an already binding contract by resolving any differences about its application.

April, concerning additional terms and procedures. On May 3, 1982, defendants sent plaintiff's principals a letter which purportedly cancelled the sale. On May 19, 1982, plaintiff filed this suit.

The subjects which were not resolved during those later negotiations were (1) whether the promissory note for the $65,000 balance of the purchase price after the agreed down payment would include cognovit provisions, (2) whether that note would be signed or guaranteed by the plaintiff's principals personally as well as in their corporate capacity, (3) whether the agreed security interest for that note would apply to the company stock as well as its business assets, (4) whether the defendants would be listed in a loss payee endorsement for a fire loss insurance policy, (5) whether an otherwise approved temporary "management agreement" would extend for ninety days rather than to the time the liquor license transferred, (6) whether the $25,000 down payment would be released to defendants from escrow when plaintiff assumed possession under the temporary "management agreement" rather than when the liquor license and the business title transferred, and (7) whether defendants' principals would remain personally responsible for the lease obligations as the landlord requested. ²

The trial court's judgment entry includes some factual findings and directs the parties to accomplish specific activities through the execution and delivery of designated documents, all in furtherance of the original "Purchase Agreement" which the court ruled sufficient to merit "specific performance and other equitable relief." No party requested separate findings of fact and conclusions of law, and the court supplied no further findings.

I

Defendants contend that the alleged agreement was not sufficiently certain to constitute an enforceable contract, or that it was not sufficiently definite to permit a specific performance decree. ³

A Certainty

An agreement is enforceable if it encompasses the essential elements of the bargain. Cf. Reck v. Daley (1943), 72 Ohio App. 307, at 315-317, 48 N.E.2d 879; Stiegelmeir v. West Side Deutscher Frauen Verein (App.1961), 88 Ohio Law Abs. 97, at 98-99, 178 N.E.2d 516; Perlmuter Printing Co. v. Strome, Inc. (N.D.Ohio 1976), 436 F.Supp. 409. Omission of less central subjects leaves those matters for later agreement or judicial resolution. The courts will not create significant additional obligations for either party, nor excuse either party from performance of agreed duties.

When the parties have agreed about issues critical to the transaction, the courts will determine the meaning of ambiguous terms according to the parties' mutual understanding, the custom and practice in the trade or community, or other established legal principles. Cf. Eckenroth v. Dowd-Feder, Inc. (App.1941), 35 Ohio Law Abs. 409, at 412, 40 N.E.2d 862; Da Rocha v. Macomber (1953), 330 Mass. 611, 116 N.E.2d 139; Marek v. McHardy (1958), 234 La. 841, 101 So.2d 689.

Similarly, the courts will supplement the parties' express or implied agreement about those essential elements with other terms implied by custom and practice or consonant legal doctrines. See Litsinger Sign Co. v. American Sign Co. (1967), 11 Ohio St.2d 1, at 14 , 227 N.E.2d 609; Born v. Hammond (1958), 218 Md. 184, 146 A.2d 44.

The modern view of contractual certainty is well expressed in Restatement of the Law 2d, Contracts (1981) 92, Section 33:

" § 33. Certainty

"(1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.

"(2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.

"(3) 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."

See, also, Corbin, Contracts (1963), Section 95.

Comment a to Section 33 of the Restatement adds:

" * * * [T]he 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.

"An offer which appears to be indefinite may be given precision by usage or trade or by course of dealing between the parties. Terms may be supplied by factual implication, and in recurring situations the law often supplies a term in the absence of agreement to the contrary. * * * Where the parties have intended to conclude a bargain, uncertainty as to incidental or collateral matters is seldom fatal to the existence of the contract."

Comment f to Section 33 notes at page 95:

"The more important the uncertainty, the stronger the indication is that the parties do not intend to be bound; minor items are more likely to be left to the option of one of the parties or to what is customary or reasonable."

The legislature has adopted similar principles for sales of personalty, in the Uniform Commercial Code. R.C. 1302.07. That legislatively demonstrated public policy should apply equally here.

In this case, the parties executed a document which described with reasonable certainty (a) the business and stock being sold, (b) the total price, (c) the down payment, (d) the interest rate and time for payment of the balance, (e) the obligation to provide and the priority of a security interest The document then states:

for that balance due, (f) the time and method for establishing an escrow, (g) the nature of the bill of sale and bulk transfer affidavit, (h) seller's duty regarding taxes, (i) proration of specified fees, taxes, and insurance premiums, (j) risk of loss for fire before transfer, (k) restraint on competition by seller, (l) seller's warranty about business licenses, (m) the items included with the business being sold, and (n) the amount and responsibility for the agent's commission.

"13. This offer of purchase shall constitute a binding contract between BUYER and SELLER, their heirs, personal representatives, successors or assigns upon the written acceptance of same by the SELLER. * * *

" * * *

"No statements or representations, except those stated in this agreement shall be binding on either of the parties hereto."

When defendant's president signed the acceptance portion of the document, he manifested an intention to make a binding contract. The document covers the essential elements of the transaction. It establishes "a basis for determining the existence of a breach and for giving an appropriate remedy." See Section 33, supra.

Indeed, it appears to be a fully integrated document which precludes oral testimony about the parties' intentions, except as that testimony...