Agreements Have To End Sometime

Agreements are entered into for a variety of reasons. At a minimum, most agreements record the rights and obligations of each party. After that, how detailed an agreement is depends on what the parties decide is necessary.

Many types of contracts are based on an action which dictates the start and end of the agreement. For example, some sales contracts begin when an item is received and ends when the item is paid for. In this type of contract there is no need to state a start and end date or time. The contract cannot start until the buyer chooses an item to purchase. If the buyer never chooses, then the contract never begins. Many contracts have their own built in timeframes due to the nature of contracts, but sometimes it is not clear. Specific timeframes are not required to make a valid contract, but it could cause confusion later on.

Take for example, the New York case of Gelman v. Buehler . In this case Geoffrey Gelman (Gelman) and Antonio Buehler (Buehler) were recent business school graduates who decided to form a partnership. Their plan was to acquire $600,000 from investors with the purpose of creating a search fund with that money. The search fund would then be used to research and find a business with growth potential. They then planned to reach out for more investor funding once they decided on a type of business. The partners pursued prospective investors for several months. Buehler withdrew from the venture after Gelman refused his demand for majority ownership of the partnership.

Gelman sued Buehler for breach of contract due to his withdrawal. Under Partnership Law § 62 (1) (b) a partnership formed by oral agreement may be dissolved unilaterally if "no definite term or particular undertaking is specified" in the underlying agreement. Whether or not Buehler breached the contract depended on whether or not their agreement had a definite term or particular undertaking. In deciding whether the agreement had a defined term or was for a particular undertaking, it looked to the meanings of the phrases and what other courts had done in similar cases. The court found that the phrase “definite term” referred to the time frame of the agreement. The agreement had an indefinite time frame, with the idea that it would take however long it would take. Since it did not have a specific or reasonable certain termination date, the court found that the agreement had no definite term. The court found that a "particular undertaking" has been defined to require a specific objective or project that may be accomplished at some future time. The court found that nothing in Gelman’s complaint was precise enough for “particular undertaking” to apply. Therefore the court found that Buehler did not breach the contract, because he was allowed to end it at anytime under Partnership Law.

It is not easy taking into account every possible scenario when crafting a contract. But, working with an experienced litigation attorney can help. The level of detail needed in a contract depends on many factors and a attorney can help you decide what is necessary to include so you can protect yourself and your assets later. If you have a contract or business related issue please contact our office.

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