James J. Gory Mechanical Contracting Inc v. BPG Residential Partners V LLC, et al., Del. Ch., C.A. No. 6999-VCG (Dec. 30, 2011), read opinion here .
This summary was prepared by a former associate of Eckert Seamans.
In this short-and-to-the-point opinion, the Court of Chancery recounts “the blackest of black-letter law that an enforceable contract requires an offer, acceptance, and consideration.”
Plaintiff, a construction company, sued defendant, a developer, for breach of contract. Plaintiff asserted that it fully performed the terms of the contract and that defendant owed plaintiff almost $300,000. Rather than answering the complaint, defendant filed a motion for judgment on the pleadings pursuant to Rule 12(c). The Court converted the motion to a 12(b)(6) motion to dismiss since the defendant never filed a pleading, and the motion for judgment on the pleadings was therefore premature.
In its motion, defendant argued that the parties entered into a superseding agreement that deferred defendant’s payment obligations under the original contract until it was able “to sell a minimum number of condominiums.” First, the Court held that the superseding “contract” was unenforceable because it lacked consideration because a promise to fulfill a pre-existing duty is not consideration. Second, the Court found that even if there was sufficient consideration, that the terms of the alleged superseding “contract” were ambiguous since they did not specify the number of condos that defendant would have to sell before resuming payments.
As a final effort, defendant argued that plaintiff waived its right to payment under the original contract by signing the superseding “contract.” The Court disagreed, and heralded the words heard by every first year law school student: “A waiver must be unequivocal.” The alleged superseding “contract” was not an unequivocal relinquishment of plaintiff’s right to collect money it was owed. Accordingly, the Court denied the motion to dismiss.