Definiteness of Terms. Southwick Homes, Ltd., develops and markets residential subdivisions. William McLinden and Ronald Coco are the primary owners of Southwick Homes. Coco is also the president of Mutual Development Co Whiteco Industries, Inc, wanted

Question

to develop lots and sell homes in Schulien Woods, a subdivision in Crown Point, Indiana. In September 1996, Whiteco sent McLinden a letter enlisting Southwick Homes to be the project manager for the developing and marketing of the finished lots (lots where roads had been built and on which utility installation and connections to water and sewer lines were complete); the letter set out the roles and expectations of each of the parties, including the terms of payment. In October 1997, Whiteco sent Coco a letter naming Mutual Development the developer and general contractor for the houses to be built on the finished lots. A few months later, Coco told McLinden that he would not share the profits from the construction of the houses. McLinden and others filed a suit in an Indiana state court against Coco and others, claiming, in part, a breach of fiduciary duty. The defendants responded that the letter to McLinden lacked such essential terms as to render it unenforceable. What terms must an agreement include to be an enforceable contract? Did the McLinden letter include these terms? In whose favor should the court rule? Explain.

Answer 1

Definiteness of terms
The court determined that the September 1996 document was not a valid, enforceable contract and ruled in favor of the defendants. The plaintiffs appealed to a state intermediate appellate court, which reversed this part of the lower court's judgment and remanded the case for a determination of the amount of damages to be paid to the plaintiffs on this claim. The appellate court pointed out, "Only essential terms need be included to render a contract enforceable. All that is required is reasonable certainty in the terms and conditions of the promises made, including by whom and to whom. In the end, the contract must provide a basis for determining the existence of a breach and for giving an appropriate remedy." The court stated that "[a]n examination of the terms of the September 1996 Agreement shows them to be reasonably certain. First, the parties are clearly identified: Whiteco and Southwick Homes. Second, the subject matter of the September 1996 Agreement is clearly set forth: development of property known as Schulien Woods for a residential subdivision. Third, the document sufficiently explains the roles and expectations of each of the parties in the development of the residential subdivision." The court concluded, "These terms are certain enough to provide a basis for determining breach and the existence of a remedy."