August 26, 2005
A Negotiation Status Email is Neither a Contract Nor an A La Carte Menu
Yesterday, reversing the District Court, the Seventh Circuit held that a 572-word email summarizing the status of negotiations between Roberson and Volvo did not constitute a contract.
During the companies' negotiation of a "fleet agreement," an email was exchanged that set forth several items upon which the companies had agreed and, also, several other items which the companies would revisit. Judge Easterbrook wrote:
Roberson had not agreed [in the e-mail] to buy a single truck; it wants to treat the email as granting it a unilateral option. No reasonable jury could conclude that the items covered in the email were independent bargains to which Volvo had bound itself. The parties were negotiating a comprehensive arrangement, not a series of stand-alone contracts. The email was not something to which Roberson could respond "I accept" and move from the negotiation to the performance stage. Nor did Roberson say "I accept" or any equivalent; the parties negotiated for another two months, and when Volvo submitted its comprehensive proposal (at least 100 times longer than the email), Roberson refused to sign.
While Roberson argued that the parties could, for example, agree to terms concerning truck purchases separately from terms concerning truck maintenance, the court determined that the negotiations were global:
If people choose to negotiate and agree item by item, that is their privilege. But that is not what these negotiators were doing, and the email was not an a la carte menu from which Roberson could check off items it wanted.
According to the court, the parties were in pre-contract talks, and certain necessary specifics had not yet been agreed upon. Judge Easterbrook noted:
Parties may negotiate toward closing a deal without the risk that a jury will think that some intermediate document is a contract, and without "fear that by reaching a preliminary understanding they have bargained away their privilege to disagree on specifics."
[Meredith R. Miller]
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