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Quake Construction v. American Airlines
Posted: Sat Sep 11, 2021 3:00 pm
by LSATMoron
Can anyone please help me understand the implications of this case?
It seems that the court is willing to underplay the importance of an EXPRESSLY written clause of the letter of intent to substitute it with its own interpretation of whether the parties intended to be bound by it.
Would this analysis apply even if the letter of intent was a full contract?
So for example, lets say there's a contract between A & B, and A writes in the contract, "we reserve the right to terminate this contract at any point in time."
It makes no sense to perform an intent analysis because A has included that clause so he can back out whenever he wants. What makes the letter of intent clause any different?
Thank you!
Re: Quake Construction v. American Airlines
Posted: Sun Sep 12, 2021 8:52 pm
by stupididiot
LSATMoron wrote: ↑Sat Sep 11, 2021 3:00 pm
Can anyone please help me understand the implications of this case?
It seems that the court is willing to underplay the importance of an EXPRESSLY written clause of the letter of intent to substitute it with its own interpretation of whether the parties intended to be bound by it.
Would this analysis apply even if the letter of intent was a full contract?
So for example, lets say there's a contract between A & B, and A writes in the contract, "we reserve the right to terminate this contract at any point in time."
It makes no sense to perform an intent analysis because A has included that clause so he can back out whenever he wants. What makes the letter of intent clause any different?
Thank you!
If you say "we reserve the right to terminate this contract at any point in time" then you are admitting there is, in fact, a contract. Which means there can be a breach of contract. maybe damages will be minimal, but that's a damages question not a breach question. Note the difference between a "we reserve to cancel this contract" clause (which admits there is a contract) and a clause that says "this letter is not intended to be binding." Also, it seems like you are contemplating at-will contracts, which confound contract doctrine in many ways but you will get to later. But when you sign an LOI and tell a company "go ahead and get started", it is pretty clear there is some intent to be bound. even if you "reserve the right" to cancel, there is at least a subsidiary promise, or it falls under good faith and fair dealing, that you wont immediately terminate the LOI after the other company has started working.
Re: Quake Construction v. American Airlines
Posted: Wed Sep 15, 2021 9:09 am
by cavalier1138
What's the context for this question? Are you a law student? Attorney? Pro se litigant?
Re: Quake Construction v. American Airlines
Posted: Thu Sep 16, 2021 5:43 pm
by LSATMoron
stupididiot wrote: ↑Sun Sep 12, 2021 8:52 pm
LSATMoron wrote: ↑Sat Sep 11, 2021 3:00 pm
Can anyone please help me understand the implications of this case?
It seems that the court is willing to underplay the importance of an EXPRESSLY written clause of the letter of intent to substitute it with its own interpretation of whether the parties intended to be bound by it.
Would this analysis apply even if the letter of intent was a full contract?
So for example, lets say there's a contract between A & B, and A writes in the contract, "we reserve the right to terminate this contract at any point in time."
It makes no sense to perform an intent analysis because A has included that clause so he can back out whenever he wants. What makes the letter of intent clause any different?
Thank you!
If you say "we reserve the right to terminate this contract at any point in time" then you are admitting there is, in fact, a contract. Which means there can be a breach of contract. maybe damages will be minimal, but that's a damages question not a breach question. Note the difference between a "we reserve to cancel this contract" clause (which admits there is a contract) and a clause that says "this letter is not intended to be binding." Also, it seems like you are contemplating at-will contracts, which confound contract doctrine in many ways but you will get to later. But when you sign an LOI and tell a company "go ahead and get started", it is pretty clear there is some intent to be bound. even if you "reserve the right" to cancel, there is at least a subsidiary promise, or it falls under good faith and fair dealing, that you wont immediately terminate the LOI after the other company has started working.
thank you so much for your explanation!