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Copeland v. Baskin Robbins U.S.A.

Copeland v. Baskin Robbins U.S.A.



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Published by: crlstinaaa on Apr 08, 2008
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Remedies where Agreement Incomplete or IndefiniteCase: Copeland v. Baskin Robbins U.S.A. (2002, CA 2nd) [PP. 443-449]Parties: Plaintiff - CopelandDefendant - Baskin RobbinsProcedural History: Trial court verdict for defendant (summary judgment). Onappeal.Facts: D was going to close down a plant and P approached D on purchasing theplant and manufacturing ice-cream for D. In May 1999, D sent P a letter where Dwould sublet and sell the plant to P. D agreed that, subject to a co-packingagreement (which was vital for the transaction b/c it specified the details of P'ssupplying D of ice-cream), and subject to negotiated pricing, that D wouldpurchase from P 7million gallons of ice-cream from P over a 3-year period. For Pto accept he had to sign the agreement and send a $3k non-refundable check. P didthis. The parties then negotiated over the co-packing agreement and the pricing.In July 1999, D broke off negotiations. Most of the key issues/terms were not yetagreed upon. D returned the $3k, and offered to sell/sublet P the plant per theoriginal agreement. But P sued, claiming that D breached the contract to negotiatethe additional terms (the co-packing agreement and pricing), without any excuse (Psays they failed to negotiate in good faith). P could not afford to accept D'soffer for the sale/sublet without the co-packing agreement.Issue: Whether the contract to negotiate an agreement is an enforceable contractor an unenforceable agreement to agree. What kind of damages are available?Holding: The contract to agree was enforceable, but D is entitled to summaryjudgment because it has shown P cannot establish reliance damages. Affirmed fordefendant.Reasoning: The failure to agree, is not by itself a breach of contract. It isonly enforceable so far as the parties are obligated to negotiate in good faith,even if no agreement results. But, there is a duty of good faith when there is anagreement to bargain, and D failed to do this (they unreasonably broke offnegotiations - they just changed their minds; in principle the negotiations couldvery well have continued and a contract could have been formed).Damages: However, since the parties had not yet decided on essential termsof the agreement, there is no way of determining the lost profits (expectationdamages) because there was no way of knowing what the terms would have been, or ifthere would have been an ultimate agreement. Therefore, reliance damages were theonly form of recovery available in an action on a contract to negotiate anagreement. Here, the manufacturer showed through the purchaser's complaint anddiscovery responses he could not establish reliance damages.RULE:· A contract to negotiate is enforceable and there is a natural duty of good faithnegotiation implied· On a contract to negotiate an agreement, the only form of recovery available isreliance damages (b/c court cannot know what the agreement would have been to beable to award expectation damages), and reliance must be proven by P.Notes· In the may 1999 agreement, in (2) basically was interpreted as saying thatBaskin Robbins agreed to negotiate in good faith· P won on an important point of law

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