SW Legal studies in Business

Contract Terms Being Clear, Court Will Rely on Those Terms, Not Other Theories to Allow Recovery
Description Appeals court held that in a contract dispute where the terms of the contract are clear, the court will use those terms to settle a dispute, and not rely on conflicting oral testimony or other theories of recovery, such as promissory estoppel.
Topic Contracts
Key Words Sales Agreement; Expiration; Commission; Oral Testimony; Promissory Estoppel
C A S E   S U M M A R Y
Facts O'Connor owned a dry-cleaning business. In 1996, he agreed to pay Pauly a commission of eight percent if he procured a buyer for the business within one year of the expiration of the agreement. The agreement expired May 31, 1997. In September 1997. With O'Connor's permission, Pauly showed the business to Kim, who made an offer to buy the business that was rejected by O'Connor. In January 1998, Kim contacted O'Connor and the two negotiated the sale directly. The sale took place on June 1, 1998, one day after the one-year period following the expiration of the listing agreement between O'Connor and Pauly. Pauly sued O'Connor for the eight percent commission. The trial court awarded Pauly the commission plus attorney fees. O'Connor appealed.
Decision

Reversed. The sales agreement stated that the commission was to be paid only if the sale was closed within one year of the expiration of the agreement. It did not, so Pauly is not entitled to recover a commission even though he introduced the two parties. The fact that O'Connor let Pauly show the property after May 31 did not extend the term of the contract. Pauly stated that the parties agreed to extend the contract; O'Connor denied that they so agreed, so the court will stick to the words of the contract. Pauly's claim of promissory estoppel also fails. There was no evidence that O'Connor promised to pay a commission after May 31, 1997; the parties were working under the terms of a valid contract. Similarly, Pauly's claim of quantum meruit also fails. Since there was no fraud, bad faith or illegality, the contract was in force and its terms will be followed.

Citation R. Corwin Pauly, Jr. and Associates v. Keko Corp., 2001 WL 1103332 (Ct. App., Ohio, 2001)

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