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Preliminary Agreement with Unsettled Terms Did Not Form Binding Contract
Description Court dismissed a breach of oral contract claim. The parties reached a tentative oral agreement but never signed a contract. The claim of breach of contract fails because there was only preliminary negotiations that specifically was to result in a final, written contract.
Topic Contracts
Key Words Breach; Preliminary Agreement
C A S E   S U M M A R Y
Facts Rappaport worked as the entertainment reporter for NBC's "Today" show. Buske and Mansfield (B&M) developed the concept for a TV series called "Fabulously Fit and Famous." B&M talked to Rappaport about being the host of the show. She claims that one day they "reached a firm oral understanding pursuant to which Ms. Rappaport would be hired as host of the 13-program series, at a per program salary of $10,000.00 ... subject to [her] commitments to NBC." A "letter of intent" was sent to Rappaport's agent, which was answered, and a tentative contract was worked out. She objected to certain details of the contract, such as endorsement requirements, that she said were not a part of their oral agreement. She refused to sign; they then advertised for another show host. She sued for breach of contract and fraud. B&M then dropped all plans for the show. B&M moved for summary judgment.
Decision Motion granted. Rappaport's argument is based on the assumption that an oral contract exists. "However, taking all inferences in plaintiff's favor, the letter from Rappaport's agent leaves no room for doubt that this is not a case about a final oral contract, but, rather, one about a preliminary agreement. ... Parties to proposed commercial transactions often enter into preliminary agreements that may provide for the execution of more formal agreements. ... Ordinarily, where the parties contemplate further negotiations and the execution of a formal instrument, a preliminary agreement does not create a binding contract." While there was a preliminary agreement, Rappaport's conduct indicates that she did not intend to be bound by the initial discussion as she insisted that her agent work out a formal contract. Furthermore, she gave nothing of value to B&M; there were only discussions of a possible relationship. She suffered no loss, so there can be no fraud.
Citation Rappaport v. Buske, 2000 WL 1224828 (S.D. N.Y., 2000)

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