1. George Mason School of Law
Contracts I
Brown v. Cara
F.H. Buckley

2. Agreements to Agree and the Leval Test
We saw the Second Circuit’s more liberal standard in Adjustrite at 228

3. Brown v. Cara 307 Was the MOU a binding agreement? Cara Brown
100 Jay Street, Brooklyn

4. Brown v. Cara 304 The Memorandum of Understanding
MOU: The parties will “work together to develop,
build, market and manage” the property
Brown to front development costs of $175K
The parties intend to “enter into a formal contract shortly”

5. Brown v. Cara
What was missing from the MOU?

6. Brown v. Cara What was missing from the MOU? Zoning approval?
Financing and construction contracts
Architectural plans
Equity stakes
What happened after the $175,000

7. Brown v. Cara Why did Cara back off the deal?
And just what part of town was this?

8. Brown v. Cara Why did Cara back off the deal?
And just what part of town?

9. Brown v. Cara: What happened to the area?
Dumbo in the 1980s

10. Brown v. Cara: What happened to the area?
Dumbo today
Dumbo has emerged as one of New York City's premier arts districts, with a cluster of for-profit art galleries and such not-for-profit institutions as the St. Ann's Warehouse and the A.I.R. Gallery. Chef Jacques Torres opened a chocolate factory in Dumbo in December Other culinary businesses in the area include Grimaldi's, the Brooklyn Ice Cream Factory, the River Café, and, in the One Old Fulton Street building, Pete's Downtown Restaurant. (Wikipedia)

11. Brown v. Cara: What happened to 100 Jay?
Rising 33 stories alongside the Manhattan Bridge, J Condo is Brooklyn’s premiere luxury residential building.
As the tallest building in Dumbo, J Condo adds an easily recognizable icon to the Brooklyn skyline with its dramatic curved, sail-like façade of floor to ceiling windows that maximizes the building’s abundant natural light and offers magnificent panoramic views of Manhattan, Brooklyn, the East River, and New York Harbor.

12. Brown v. Cara: What happened to 100 Jay?
Does this suggest why the deal didn’t happen?
3 bedroom for $2.5M
100 Jay 12

13. Brown v. Cara
What is the difference between Leval’s Type I and Type II agreements?

14. Brown v. Cara
Badges of Type I agreements?

15. Brown v. Cara Badges of Type I agreements?
No express denial of an agreement
Partial performance
All material terms agreed to
Not an agreement of a kind usually committed to writing

16. Brown v. Cara
Badges of a Type II agreement?

17. Brown v. Cara Badges of a Type II agreement? An intention to be bound
Too uncertain for a Type I agreement
Some partial performance
The context?

18. Brown v. Cara Badges of a Type II agreement? An intention to be bound
Too uncertain for a Type I agreement
Some partial performance
The context?
Was Cara in bad faith?

19. Good faith? What does a good faith Type II negotiation mean?
UCC 1-201(20) “Good faith means …honesty in fact and the observance of reasonable commercial standards of fair dealing”

20. Arcadian Phosphate at 312
Consistent with Brown?

21. Arcadian Phosphate at 312
Consistent with Brown?

22. Various Possibilities
A fully binding agreement (Type I)
Not binding in any way
Good faith duties to negotiate (Type II) with an enforceable agreement
Good faith duties with reliance damages
Quasi-contract

23. Recital Clauses?
The Parties have entered into the Agreement in the expectation that it will be mutually binding and that both parties will in good faith perform their obligations as understood by them as of the date of the agreement.
The Parties understand that not all terms and conditions can be entirely specified as of the date of the agreement and undertake to negotiate such terms and conditions in good faith from time to time during the course of the Agreement.