What constitutes a binding contract?

[jkmort]

What is the name of your state (only U.S. law)? New York

Quick background: We completed a tenant build out for a clothing store in NY city. Plans were done, permitted and we did the construction and passed inspections, turned store over to the tenant who then occupied and used the store. We had only a signed proposal (detailing the costs) from someone who represented himself as the Tenant’s representative. Despite promises of a formal contract being issued, it ended up not being written up let alone executed. However, during the construction, progress payments were invoiced to the Tenant. The tenant did pay two of these requests for payment. But the later requests and close out documentation for final and full payment has not been honored and Tenant is now refusing as “no contract.”

We have documentation on the Tenant’s representative’s signed off on the cost breakdown proposal (acceptance), we also have Tenant’s representative’s signature as “Tenant” on the NY ST-124 at start of project for Capital Gains tax and we have the two actual paid progress payments by the Tenant themselves as well as evidence of Tenant occupancy and use of the store.

Question: Are there precedents or basic common law agreements, that a binding contract exists where real and tangible exchange occurs between two parties (payments by Tenant to us and our providing a completed store to Tenant they opened and used)?

Thanks very much.

James

 

[latigo]

James:

Clearly this dispute has such momentous financial consequences that it must be assumed that you are already in consultation with your New York attorneys.

But since you asked, these are just some immediate thoughts, which you will of course only regard as so.

On the face several legal issues appear involving the law of agency, a number of principles of contract law and the statutes of fraud.

As far as agency, I don’t see much substance in any argument by the tenant that the actions of the “representative” were not binding upon it. In the least the tenant ratified that conduct in making the remittances and accepting possession of the building.

Nor do I think it tenable were the tenant to assert that the “build out agreement” is unenforceable under the statutes of fraud as not being in writing and committed to by the tenant's signature.

Even partial performance of an agreement that is otherwise covered under the statutes of fraud renders the statute inapplicable. And here it appears that your performance was complete.

A precedent would be the New York case of Brook Shopping Centers Inc. vs. F. W. Woolworth Co., 628 N.Y.S.2d 318. There the rental provisions of a long term lease was held to be orally modified by the conduct of the shopping center in accepting Woolworth’s reduced payments.

I think that the biggest hurdle you will have is in establishing that all of the essential elements of the “agreement” with such certainty that the court can enforce them. The court will not speculate on what they could have been or what the parties may have contemplated

Sax