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Illinois courts have held that to state a cause of action for breach of a fiduciary duty, a plaintiff must prove: (1) a fiduciary duty on the part of the defendant, (2) the defendant's breach of that duty, and (3) damages that were proximately caused by the defendant's breach. DOD Technologies v. Mesirow Ins. Services, Inc., 381 Ill.App.3d 1042 (1st Dist. 2008). An Illinois appellate court found that a fiduciary relationship is created when, by agency, or business association and experience, trust and confidence are placed by one party in another who, as a result, gains an influence and superiority over the other party. Illinois Non-Profit Risk Management Ass'n v. Human Service Center of Southern Metro-East, 378 Ill.App.3d 713 (4th Dist. 2008). Regardless of the level of trust between the parties, a fiduciary relationship requires one party to exert dominance and influence over the other party. Id. A fiduciary duty consists of a duty of exercising good faith, honesty, and fairness in the parties’ dealings. Illinois Jurisprudence, Business Relationships § 15:40.

A fiduciary relationship may be presumed, as a matter of law, from the relationship of the parties, such as an attorney-client relationship. Illinois Jurisprudence, Personal Injury and Torts § 13:36. Other examples of a fiduciary relationship are directors owe a fiduciary duty to their corporations and to their shareholders and principal-agent relationships. Crichton v. Golden Rule Ins. Co., 358 Ill.App.3d 1137 (5th Dist. 2005); and Illinois Non-Profit Risk Management Ass'n v. Human Service Center of Southern Metro-East, 378 Ill.App.3d 713 (4th Dist. 2008).

In determining whether the facts of a particular case establish a fiduciary relationship, courts look to the following factors: (1) the disparity in age, health, mental condition, education, and business experience between the parties; (2) the degree of kinship between the parties; and (3) the extent to which one party entrusted the other with the handling of its business affairs. Yokel v. Hite, 348 Ill.App.3d 703 (5th Dist. 2004). A party seeking to show that a fiduciary relationship existed, must prove that such a fiduciary duty arose by clear and convincing evidence. Id. However, a fiduciary relationship does not exist where one party to a business contract trusts the other to do no more than fulfill its obligations under the contract. Id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Business Litigation , Fiduciary Duty

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In Hayes Mechanical, Inc. v. First Indus., L.P., a recent Illinois Appellate Court decision, the court addressed the issue of whether one can recover damages for unjust enrichment from a breach of an implied contract in law. Hayes Mechanical, Inc. v. First Indus., L.P., 351 Ill.App.3d 1 (1st Dist. 2004). In the case, a construction contractor that renovated a commercial building pursuant to a contract with the building's tenant brought an action for unjust enrichment against the building's landlord, after the tenant failed to pay all of the contractor's charges. Id. At trial, a Circuit Court of Cook County granted summary judgment in favor of the landlord, holding that the contractor had failed to state a cause of action for unjust enrichment. Id. On appeal, the Illinois 1st District Appellate Court affirmed the trial court’s ruling, holding that the construction contractor that renovated the commercial building, pursuant to a contract with the building's tenant, failed to state a claim of unjust enrichment against the landlord after the tenant failed to pay all of the contractor's charges. Id. Furthermore, the court reasoned that there was no indication that the landlord enticed the contractor to complete the renovation work requested by the tenant, and the mere fact that landlord may have benefited from contractor's labor and materials was not sufficient in itself to require the landlord to make restitution to the contractor. Id.

Recovery under a theory of unjust enrichment is based on a contract implied in law. Wheeler-Dealer, Ltd. v. Christ, 379 Ill.App.3d 864 (1st Dist. 2008). Because recovery under the theory of unjust enrichment is based upon an implied contract, where the parties' relationship is governed by a contract, the doctrine of unjust enrichment is not applicable. Id. A contract implied in law exists from an implication of law that arises from facts and circumstances independent of an agreement or consent of the parties. Illinois Jurisprudence, Commercial Law § 2:3. It is equitable in nature and is based on the premise that no one should unjustly enrich himself at another's expense. Id. Illinois courts have held that the essence of a cause of action for contract implied in law is the defendant's failure to make equitable payment for a benefit which it voluntarily accepted from the plaintiff. Id.

According to the Illinois Supreme Court, “to state a cause of action based on the theory of unjust enrichment, a plaintiff must allege that the defendant has unjustly retained a benefit to the plaintiff's detriment, and that defendant's retention of the benefit violates the fundamental principles of justice, equity, and good conscience.” Eighteen Investments, Inc. v. NationsCredit Financial Services Corp., 376 Ill.App.3d 527 (1st Dist. 2007). The essential element is the receipt of benefits by one party, which it would be inequitable for him to retain without payment. Illinois Jurisprudence, Commercial Law § 2:3. Even when a person has received a benefit from another, he is liable for payment only if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for him to retain it. Hayes Mechanical, Inc. v. First Indus., L.P., 351 Ill.App.3d 1 (1st Dist. 2004). The mere fact that a person benefits another is not of itself sufficient to require the other to make restitution. Id. A cause of action based upon unjust enrichment does not require fault or illegality on the part of the defendants. Eighteen Investments, Inc. v. NationsCredit Financial Services Corp., 376 Ill.App.3d 527 (1st Dist. 2007). The essence of a cause of action based upon unjust enrichment is that one party is enriched and it would be unjust for the party to retain the enrichment. Id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Breach of Contract , Business Litigation , Implied Contract , Unjust Enrichment

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In Jannusch v. Naffziger, a recent Illinois Appellate Court decision, the court addressed the issue of whether one can recover damages from a breach of an oral contract. Jannusch v. Naffziger, 379 Ill.App.3d 381 (4th Dist. 2008). In the case, the sellers of a concession business entered into an oral agreement with the buyers to purchase the concession business and the equipment. Id. The buyers made an initial payment to purchase the business, worked some events, and then, returned the business equipment to a storage facility at the end of an economically disappointing event season. Id. As a result, the sellers brought an action against the buyers for breach of an oral contract. Id. At trial, the court applied the predominant purpose test to determine whether the contract is for the sale of goods or services. Id. The court determined that the contract was for the sale of goods, and thus, applied the Uniform Commercial Code (“UCC”) as the governing body of law. Id. The Illinois trial court then held in favor of the buyers, reasoning that there was a contract formed, however, the evidence was insufficient to establish by a preponderance of the evidence that there was a meeting of the minds as to what that agreement was because there were missing terms. Id.

On appeal, the Illinois 4th District Appellate Court held that the trial court was correct in applying the UCC. Id. However, the appellate court overruled the trial court’s final ruling, holding that the parties' agreement contained essential terms and was sufficiently definite to form a sales contract and that the buyers did breach the oral contract. Id. The court found that the oral agreement for the sale of the concession business and its equipment contained essential terms and was sufficiently definite to form a sales contract, where the purchase price was $150,000, buyers paid a portion of the purchase price, items to be transferred were specified, and buyers took possession of the items to be transferred and used them as their own even though the agreement did not allocate the price of the equipment and goodwill, did not contain a covenant not to compete, and did not contain terms on how to release liens or the effect of buyers not obtaining loan approval. Id. The court reasoned that a contract may be enforced, even though some terms may be missing or left to be agreed upon, unless the essential terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken. Id.

In support of its holding, the court further held that an oral contract for the sale of goods, which has been partially performed, is enforceable. Id. The Illinois Appellate Court stated that the conduct of parties to a contract may indicate an agreement to its terms, even if the parties do not share a subjective understanding as to the terms of that contract. Id.

In conclusion, the court held that the buyers breached the oral sales agreement concerning the concession business and its equipment by returning the equipment at the end of an economically disappointing event season after having made a $10,000 payment on the $150,000 purchase price. Id. The court reasoned that the fact that a formal written document is anticipated does not preclude enforcement of a specific preliminary promise. Id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Breach of Contract , Business Litigation , Oral Contracts

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In a recent Illinois Supreme Court decision, the court addressed the issue of defamation between competing businesses where a menswear store brought suit against a competing menswear store alleging a newspaper advertisement was defamatory. Imperial Apparel, Ltd. v. Cosmo's Designer Direct, Inc., 227 Ill. 2d 381 (2008). The trial court dismissed the complaint, however, on appeal, the Illinois Supreme Court held that assuming that First Amendment protection against defamation claims extended to nonfactual statements made by one private party about another, on a matter of purely private concern, defendant's newspaper advertisement could not reasonably be interpreted as stating actual facts about plaintiffs. Id. Under Illinois law, commercial competitors are privileged to interfere with one another's prospective business relationships provided their intent is, at least in part, to further their businesses and is not solely motivated by spite or ill will. Id. The court found that in Illinois, ordinary negligence suffices as the degree of fault, for purposes of the principle that in a defamation action brought by a private figure against a defendant, the First Amendment protection of speech precludes imposition of liability without a showing of fault. Id. In conclusion, the court reasoned that special standards for fault and falsity in defamation actions, by the First Amendment protection of speech, did not apply in the defamation action brought by the menswear store against the competing menswear store in the absence of allegations that the plaintiff’s store was a public figure, or that statements made in the advertisement addressed a matter of public concern. Id. The court did note that the privilege to compete does not, however, encompass the use of improper competitive strategies that employ fraud, deceit, intimidation, or deliberate disparagement. Id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Business Litigation , Defamation

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In the article “E-Mails Sufficient to Modify Contract, N.Y. Appellate Panel Says,” published by the New York Law Journal, the author, Noeleen G. Walder, discusses a recent New York appellate court decision that addressed the issue of whether a series of e-mails were signed writings that could be used to modify an agreement. Noeleen G. Walder, E-Mails Sufficient to Modify Contract, N.Y. Appellate Panel Says, New York Law Journal, April 7, 2008. The court found that the e-mails satisfied the requirements of the Statute of Frauds because the name at the end of each message signaled the author's "intent to authenticate" its contents. Id.

“Corbin on Contracts” states that almost any possible form of writing may be sufficient to satisfy the requirements of the statute of frauds. 4-23 Corbin on Contracts § 23.1. Moreover, the writing may be in the form of a traditional written communication or it may be recorded in a technological medium such as computer-generated messages including emails. Id. Writing sufficient to satisfy the Statute of Frauds need not itself be a valid contract, but only evidence of one. Crawley v. Hathaway, 309 Ill. App. 3d 486 (4th Dist. 1999). Writing required by the Statute of Frauds may include one or more documents that collectively contain all the essential terms of the agreement, which is signed by the party to be charged. Prodromos v. Howard Sav. Bank, 295 Ill. App. 3d 470 (1st Dist. 1998). In order to ascertain what sort of writing is sufficient to meet the requirements of the statute of frauds, no form of language is necessary if the intention can be gathered. 19A Ill. Law and Prac. Frauds, Statute of § 41.

An Illinois appellate court has defined “contract modification” as a change in one or more respects that introduces new elements into the details of the contract and cancels others, but leaves the general purpose and effect undisturbed. Nebel, Inc. v. Mid-City Nat. Bank of Chicago, 329 Ill. App. 3d 957 (1st Dist. 2002). For a contract modification to be enforced, it must satisfy the same criteria required for a valid contract; offer, acceptance, and consideration. Watkins v. GMAC Financial Services, 337 Ill. App. 3d 58 (1st Dist. 2003). Modification of a contract may be ratified by acquiescence in the course of conduct consistent with the existence of that modification. Corrugated Metals, Inc. v. Industrial Com'n, 184 Ill. App. 3d 549 (1st Dist. 1989).

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Breach of Contract , Business Litigation

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