Sun Printing & Publishing Association v. Remington Paper & Power Co., Inc.
139 N.E. 470 (1923)
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Rule of Law:
A contract is unenforceable for indefiniteness if it leaves essential terms, such as the duration for which a price will apply, open for future negotiation between the parties, even if it establishes a maximum price ceiling.
Facts:
- Sun Printing & Publishing Association (Plaintiff) and Remington Paper & Power Company (Defendant) entered into a written agreement for the sale of 16,000 tons of paper.
- The agreement specified deliveries of 1,000 tons per month from September 1919 to December 1920.
- The price was fixed for shipments made from September through December 1919.
- For the remaining period (January to December 1920), the contract stipulated that the price and the length of the term for which that price would apply were to be agreed upon by the parties.
- This future price was capped, stating it would be 'in no event to be higher than the contract price for newsprint charged by the Canadian Export Paper Company to the large consumers.'
- After performing the contract for the first four months, Remington gave notice that it considered the contract imperfect and would not make any further deliveries in 1920.
- Sun Printing demanded that Remington deliver the paper for 1920 at the maximum price set by the Canadian Export Paper Company standard.
- Remington refused to deliver any more paper.
Procedural Posture:
- Sun Printing & Publishing Association sued Remington Paper & Power Company in a New York trial court (Special Term) for damages from breach of contract.
- The trial court granted Remington's motion to dismiss the complaint, finding the contract unenforceable.
- Sun Printing, as the appellant, appealed to the intermediate appellate court (the Appellate Division).
- The Appellate Division reversed the trial court's order, holding that the complaint stated a valid cause of action.
- Remington, as the appellant, then appealed that decision to the highest court in New York, the Court of Appeals.
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Issue:
Is a contract for the sale of goods enforceable when it provides a mechanism for determining a maximum price for future deliveries but leaves the duration for which that price will apply to a future agreement between the parties?
Opinions:
Majority - Cardozo, J.
No. An agreement is not an enforceable contract if essential terms, such as both price and the duration for which that price applies, are left open to future negotiation. Even with a defined price ceiling, the failure to specify the term of its application renders the agreement an inchoate 'agreement to agree.' The court cannot create a contract for the parties by imposing a 'reasonable' term or assuming the price should fluctuate monthly, as the contract's language explicitly called for a future agreement on a fixed term. Because the parties failed to agree upon the length of time the price would be effective, a critical element of the bargain was missing, and the contract is unenforceable.
Dissenting - Crane, J.
Yes. The contract should be held enforceable because the parties clearly intended to be bound by a sale of 16,000 tons of paper, and the agreement provides a sufficiently definite price standard. The defendant deliberately breached its obligation by refusing to negotiate or deliver. The court should prevent the defendant from escaping its formal obligations on a technicality. It could do so by holding the defendant to the Canadian price for the remainder of the term, treating the contract as a month-to-month agreement at the prevailing Canadian price, or implying a reasonable term, thereby giving effect to the parties' clear intent to create a binding contract.
Analysis:
This case is a classic illustration of the common law requirement of definiteness in contract formation. It establishes that leaving multiple essential terms, such as price and duration, open to future negotiation renders a contract an unenforceable 'agreement to agree.' The decision solidifies the principle that courts will not supply essential terms for the parties, even where a seemingly objective standard for one of those terms (price) exists. It highlights a key distinction: providing a mechanism to determine a price is not sufficient if the duration for that price is also left undetermined, as both are considered essential to the bargain's certainty.
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