Negotiation and the Formation of Contract

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  1. Negotiation and the Formation of Contract
    1. Introduction: The Role of Courts
      1. Sun Printing & Publishing Ass’n v. Remington Paper & Power Co.
        1. Facts: Π agreed to buy paper from Δ for a period of months with the price for some months and the term of that price to be determined in the future. The price would not be higher than the current price listed by a particular third party.
        2. Analysis:
          1. Cardozo found that, while the maximum price was established in the contract, the ascertainment of this price did not simultaneously establish an agreement with respect to the amount of time during which that price would apply.
            1. *Cardozo admits his holding in this case wasn’t really equitable, and that the D took advantage of a loophole. But he said it was more important that the Court respond to the “need of certainty in the transactions of commercial life” and that the Court not undertake to “revise” as well as interpret.
          2. Dissent held that it is not such a big deal to inquire for how long the price would be in effect–the parties could establish one price for the full year, or they could have done it on a month-by-month basis, each month measuring against the price charged by the Canadian Paper Company. OR, they could even look to the length of Canadian Paper’s contracts with its large consumers (to determine “contract price”) and just do it for the same period of time, and renew it at the same period of time.
          3. Dissent says that the contract could easily be filled in–unfortunately, this (per Prof.) kind of reinforces Cardozo’s argument. The Dissent actually offered several alternatives, which suggests the contract is too indefinite, that the terms are too vague to be enforced, that the intention of the parties can’t be read at all via the contract.
            1. Crane was more willing to “fill in the blanks,” and Cardozo felt that the need for certainty cut against the court’s ability to ‘revise.’
        3. Result: Δ was not bound because the fallback on the price term in the absence of agreement did not make up for the absence of a time limit. The contract was too indefinite. (Cardozo)