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Ruling in favor of the appellant, the Supreme Court established a standard for challenging the fairness of arbitration clauses in court. See Rent-A-Center, West v. Jackson, 2010 WL 2471058
(2010). Through a 5-4 majority, the court in Rent-A-Center, West v. Jackson held that if a party challenges the validity of an entire agreement, then the validity question, as per the language of the contract, may be decided by an arbitrator. See Id. If the challenge is specific to the arbitration provision, and not the entire agreement, then a court may have jurisdiction to decide the challenge. See Id.

In 2004, Jackson entered into an employment contract with Rent-A-Center that included an arbitration provision which specifically precluded Jackson from pursuing any claim in court. Id. The Agreement provided for arbitration of all “past, present or future disputes arising out of Jackson's employment with Rent-A-Center.” Id. Further, it also provided that an “Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement.” Id. Included in this agreement was the authority to arbitrate “any claim that all or any part of this Agreement is void or voidable.” Id. In 2007, Jackson filed a lawsuit against the defendant in federal district court. Id. The defendant filed a motion to dismiss the claim on the grounds that the contract clearly and unambiguously provided for arbitration of the claim. Id. Jackson argued that the arbitration agreement was procedurally and substantively unconscionable and that the enforceability of such an agreement was for a court to decide. Id.

The arbitration provision of the employment agreement signed by the parties had two parts. Id. The first part required that any dispute arising out of Jackson's employment was to be settled by arbitration. Id. The second part stated that any challenge as to the validity of the arbitration provision was also to be settled by an arbitrator. Id. The Court held that if Jackson had only challenged the second part- the validity of arbitration provision- then a court may have had jurisdiction. See Id. Since Jackson challenged the entire agreement as being unconscionable, and the contract specifically stated that a challenge of this nature was to go to arbitration, then the issue of unconscionability of the entire agreement was to be determined by an arbitrator. See 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: Arbitration , Business Litigation

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In Ashcroft v. Iqbal, the Supreme Court reinforced the Twombly Court’s interpretation of Federal Rule of Civil Procedure 8(a)(2). Ashcroft v. Iqbal, 129 S.Ct. 1937, (2009). In Twombly, the Court developed a plausibility standard to determine whether a complaint sufficiently states a claim showing the pleader is entitled to relief. See id. The Twombly Court’s plausibility standard requires the pleader to establish their claim with facts “in those contexts where such amplification is needed to render the claim plausible." Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, (2007). “A claim may have facial plausibility when the Plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” See Ashcroft v. Iqbal.

“Although [the court] must accept well-pled facts as true, it is not required to accept a plaintiff’s legal conclusions.” Sinaltrainal v. Coca-Cola Company, 578 F.3d 1252, (2009). “A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not be sufficient.” See Ashcroft v. Iqbal. “Legal conclusions can provide the frame work of a complaint but they must be supported by factual allegations.” Bell Atlantic Corporation v. Twombly.

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 , Pleadings

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In Illinois, an employer is subject to vicarious liability for his employees under the doctrine of respondeat superior. Bank of America, N.A. v. Bird.392 Ill.App.3d 621, 911 N.E.2d 1239, 331 Ill.Dec. 1009 (2009). Under this doctrine, an employer can be held liable for his employee’s misconduct if the misconduct is within the scope of the employment. See id. In order to show that an employee’s actions are within the scope of his employment, “the conduct must be of the kind the employee is employed to perform, must occur within the authorized time and space limits of the employment, and must be done at least in part to serve the employer, rather than be for the employee’s personal ends.” Bagent v. Blessing Care Corp., 224 Ill.2d 154, 164-65, 308 Ill.Dec. 782, 862 N.E.2e 985, 991-92 (2007).

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Posted In: Business Litigation , Respondeat Superior , Vicarious Liability

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A stockholder of a Delaware corporation, under 8 Del. C. § 220, has a statutory right to inspect the books and records of the corporation. Norfolk County Retirement System v. Jos. A. Bank Clothiers, Inc., 2009 WL 353746 (Del.Ch.) For a stockholder to obtain the books and records of the corporation they must have a proper purpose for the request. See id. Proper purpose, as defined by § 220, “is a purpose reasonably related to the plaintiff’s interest as a stockholder. See id. Delaware courts have recognized that investigating the possibility of pursuing a derivative action based on perceived wrongdoing by a corporation’s officers or directors represents a proper purpose for a § 220 demand. See id. However, the scope of documents available to a stockholder’s request under § 200 is limited. See id. Delaware courts repeatedly have held that “the scope of inspection should be circumscribed with precision and limited to those documents that are necessary, essential, and sufficient to the stockholder’s purpose.” See 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.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Shareholder Derivative Litigation

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Illinois Courts define promissory estoppel as a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. Restatement (Second) of Contracts § 90(1), at 242 (1981). To establish a claim for promissory estoppel in Illinois, the plaintiff must prove that the defendant made an unambiguous promise to plaintiff, the plaintiff relied on such promise, the plaintiff’s reliance was expected and foreseeable by defendants, and the plaintiff relied on the promise to its detriment. Newton Tractor Sales, Inc. v. Kubota Tractor Corporation, 233 Ill.2d 46, 906 N.E.2d 520, 329 Ill.Dec. 322 (2009).

Promissory estoppel may be an option for a party to recover without the presence of a contract. Newton Tractor Sales, Inc. v. Kubota Tractor Corporation (2009). Under the doctrine of promissory estoppel although there may be absent a bargain for consideration, a person who makes a promise may nonetheless be bound by its terms. Bank of Marion v. Robert Fritz, Inc., 57 Ill.2d 120, 311 N.E.2d 138 (1974). Promissory estoppel is most extensively recognized as a defensive measure with respect to the abandonment of existing legal rights. Newton Tractor Sales, Inc. v. Kubota Tractor Corporation (2009). However, in Illinois and other states, the Courts also understand promissory estoppel as an offensive theory of recovery, or cause of action, in any situation where one party relies on the promise of another party to its detriment in such a manner that it would be an injustice not to enforce the promise. See 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.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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According to the U.S. Supreme Court, a forum selection clause is prima facie valid and should be enforced unless enforcement is shown by the opposing party to be unreasonable under the circumstances. Applied Card Systems, Inc. v. Winthrop Resources Corp., No. Civ. A. 03-4104, 2003 WL 22351950, *2. Moreover, the United States Supreme Court has explicitly held that a forum selection clause in a standardized, non-negotiable contract may be quite permissible. See Carnival Cruise Lines, Inc. v Shute, 499 U.S. 585, 593-94, 111 S.Ct 1522, 113 L.Ed.2d 622 (1991). The Courts reason that a party, especially one that conducts business around the world, might have a special interest in limiting the jurisdictions in which it could be subject to suit. Tricome v. Ebay, Inc. 2009 WL 3365873 (E.D.Pa.) However, the Courts may deem a forum selection clause invalid if there is some form of contractual unconscionability. See id. For instance, courts may deem the forum selection clause unenforceable if the party challenging the user agreement did not have a meaningful choice regarding the acceptance of its provisions because there were high pressure tactics or external pressures used to require the acceptance of the agreement. See 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.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Forum Selection Clauses

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In Illinois, generally, the law regards a corporation as an entity separate and distinct from its officers, shareholders, and directors and therefore those parties will not be held personally liable for the corporation’s debts and obligations. Melko v. Dionisio, 219 Ill.App.3d 1048, 1063, 162 Ill.Dec. 623, 580 N.E.2d 586, 594 (1991). However, in certain circumstances, the corporate form may be disregarded, such as where the corporation is merely the alter ego or the business conduit of another dominating personality. See id.

In Illinois, piercing the corporate veil is a task which the courts should generally undertake reluctantly. Pederson v. Paragon Pool Enterprises, 214 Ill.App.3d 815, 819, 158 Ill.Dec. 371, 574 N.E.2d 165, 167 (1991). The Courts should not interfere with the corporate form anymore than it would a private contract, and the corporate veil should only be pierced when it appears that something in the particular situation has “gone amiss.” Tower Investors, LLC v. 111 East Chestnut Consultants, Inc, 371 Ill.App.3d 1019, 864 N.E.2d 927, 309 Ill.Dec. 686. Particularly, in breach of contract cases, courts should apply even more stringent standards to determine when to pierce the corporate veil than they would in tort cases. See id.

Illinois Courts may pierce the corporate veil if the two following requirements are satisfied. First, if there is such a unity of interest and ownership that the separate personalities of the corporation and the parties who compose it no longer exist. Second, if the circumstances are such that adherence to the fiction of a separate corporation would promote injustice or inequitable circumstances. Pederson v. Paragon Pool Enterprises, 214 Ill.App.3d 815, 819, 158 Ill.Dec. 371, 574 N.E.2d 165, 167 (1991). In a breach of contract case, “additional compelling facts,’ “such as a finding of fraud, may also be required. Main Bank of Chicago v. Baker, 86 Ill.2d at 205-06, 56 Ill.Dec. 14, 427 N.E.2d at 101-02 (1981). Where there is no evidence of any misrepresentation, no attempt to conceal any facts, and the parties possess a total understanding of all of the transactions involved, Illinois courts will not pierce the corporate veil in a breach of contract situation. See 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.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Fraud , Piercing the Corporate Veil

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Illinois courts have held that for a partnership or joint venture to exist a written agreement may not be required as long as specific requirements are satisfied. The Uniform Partnership Act defines a partnership as “an association of two or more persons to carry on as co-owners of a business for profit." 805 ILCS 205//6(1) (West 2002). “A relationship between two or more parties may be considered a partnership by the courts if the parties join together to carry on a venture for their common benefit, each contributing property or services and having a community of interest in the profits of the venture." Kennedy v. Miller, 221 Ill.App.3d 513, 521, 163 Ill Dec. 934, 582 N.E.2d 200 (1991). “Partnership legal principles govern joint ventures and the only distinction of consequence between the two is that a joint venture relates to a single enterprise or transaction, whereas a partnership relates to a general business of a particular kind.” Dremco, Inc. v. South Chapel Hill Gardens, Inc., 274 Ill.App.2d 534, 538, 211 Ill.Dec. 39, 654 N.E.2d 501 (1995). Even though a written agreement may not be necessary, a bald assertion that a partnership or joint venture exists is not sufficient to plead the existence of such a relationship. Romanek, 324 Ill.App.3d at 405, 257 Ill.Dec. 436, 753 N.E.2d 1062. Therefore, the courts generally look for some sign of a venture for common benefit between the two parties and in particular for some indication of a sharing of profits. Landers-Scelfo v. Corporate Office Systems, Inc., 356 Ill.App.3d 1060, 827 N.E.2d 1051, 293 Ill.Dec. 170 (2005).

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.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Contract Formation , General Partnerships , Joint Venture Agreements

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Illinois Courts have held that in a product liability case, strict liability may be predicated on a finding that the product is unreasonably dangerous, regardless of who is at fault. Miller v. Dvornik, 149 Ill.app.2d 883, 889, 103 Ill.Dec. 139, 501 N.E.2d 160, 164 (1986). The focus when determining strict liability is whether a product is unreasonably dangerous and whether the product in its present state, without the installation of optional safety devices, is dangerous because it fails to perform in the manner reasonably to be expected in light of its nature and intended function.” Miller, 149 Ill.App.2d at 888, 103 Ill.Dec. 139, 501. An important aspect of strict liability is that proof of negligence is unnecessary. Heyen v. Sanborn Manufacturing Co., 223 Ill.App.3d 307, 315, 165 Ill.Dec. 407, 584 N.E.2d 841, 846 (1991).

Moreover, Illinois Courts have held that strict liability can be imposed upon any party who sells a product in a defective condition unreasonably dangerous to the user or consumer. Lamkin v. Towner 138 Ill.2d 510, 528, 150 Ill.Dec. 562, 563 N.E.2d 449, 457 (1990). A seller who puts a defective product into the stream of commerce runs the risk of being held strictly liable for injuries caused by the product, regardless of whether the seller actually knew of the defect, contributed to the defect or failed to discover the defect. Sims v. Teepak, Inc., 143 Ill.App.2d 865, 867, 97 Ill.Dec. 914, 493 N.E.2d 721, 723-24 (1986).

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.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Products Liability , Strict Liability

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Illinois courts have held that a contract may be deemed unconscionable when it is improvident, oppressive, or completely one sided. Streams Sports Club, Ltd. v. Richmond, 99 Ill.2d 182, 191, 75 Ill.Dec. 667, 457 N.E.2d 1226, 1232 (1983). Additionally, Illinois courts have provided two requirements, procedural unconscionability and substantive unconscionability, that could be present for a contract to be deemed unconscionable and therefore unenforceable. Zobrist v. Verizon Wireless 354 Ill.App.3d 1139, 822 N.E.2d 531, 290 Ill.Dec. 946 (2004).

The first requirement, procedural unconscionability, is defined by the courts as some type of impropriety during the process of forming the contract depriving the party of a meaningful choice. See id. The factors the courts consider are: the circumstances surrounding the transaction, including the manner in which the contract was entered into, whether each party had a reasonable opportunity to understand the terms of the contract and whether important terms were hidden. Franks Maintenance & Engineering, Inc. v. C.A. Roberts Co., 86 Ill.App.3d 980, 989-90, 42 Ill.Dec. 25, 408 N.E.2d 403, 410 (1980). In Illinois, however, just because a contract is presented by a party in a superior bargaining position without allowing the other party to negotiate any contract terms does not necessarily mean that the clause or contract is unconscionable. Koveleskie v. SBC capital Markets, Inc., 167 F.3d 361, 367 (7th Cir.1999).

The second requirement, substantive unconscionability, is defined by the courts as situations where a clause or term in a contract is allegedly one sided. See Zobrist. However, if the plaintiff knowingly and freely assents to a clause that works a substantial disadvantage against the plaintiff, he or she cannot be later heard to complain of the clause. See 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.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm based in Chicago, Illinois. Walid J. Tamari and Grant Blumenthal are partners in the law firm's complex litigation practice group.

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Posted In: Breach of Contract , Business Litigation , Defenses to Breach of Contract

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For the purposes of determining trade secret protection, an Illinois Court has held that information about customers’ needs and requirements may have a different status under the law that depends on whether the business sells goods or if the business provides a service. Del Monte Fresh Produce, N.A., Inc. v. Chiquita Brands International Inc., 616 F.Supp.2d 805 (2009).

Courts are more likely to deem information about customers’ needs and requirements a trade secret when the business provides professional services. See id. Under these circumstances, customers maintain trust in a particular seller, and that trust is a valuable business asset created by years of management that the employee is not likely allowed to take with him. See id.

However, information about customers’ needs and requirements generally may not be considered a trade secret when dealing with the selling of ordinary goods. See id. The current price and quality, rather than a past investment in meeting customers needs, are the decisive factors in the continued success of the business, and they are not appropriated by the departing employee. See 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.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a Chicago-based business litigation and business law firm. The law firm represents clients in a broad range of business disputes. Attorneys Walid J. Tamari and Grant Blumenthal are the law firm’s co-managing partners.

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Posted In: Business Litigation , Misappropriation of Trade Secrets , Trade Secrets

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Illinois courts have held that fraud consists of anything calculated to deceive, including positive acts, omissions, concealment, breach of legal or equitable duty, and breach of a trust or confidence. Rybak v. Provenzale, 181 Ill.App.3d 884, 899 (2d Dist. 1989). The basic concept of fraud is founded on conduct calculated to deceive. Illinois Jurisprudence, Personal Injury and Torts § 13:01. Fraud has been said to comprise anything calculated to deceive and may consist of a single act, a single suppression of truth, suggestion of falsity, or direct falsehood, innuendo, look, or gesture. Id. A fraudulent misrepresentation may consist of actions, words, or other conduct that constitutes a statement of fact. Id. A representation is fraudulent when, to the knowledge or belief of its utterer, it is false in the sense in which it is intended to be understood by the recipient. Miller v. Lockport Realty Group, Inc., 377 Ill.App.3d 369, 377 (1 Dist. 2007).

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.

Litigators, Walid J. Tamari and Grant Blumenthal, are co-chairs of the firm's commercial litigation practice group.

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Posted In: Business Litigation , Fraud

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Generally, Illinois courts require a false representation relating to a matter of fact, rather than opinions, to establish a cause of action for fraud. Illinois Jurisprudence, Personal Injury and Torts § 13:06. Opinions are usually matters of judgment, estimates, and guesses, and a person relies on such at his or her own risk. Id. As a general rule, Illinois law will not support a claim for fraud predicated on an opinion. Schrager v. North Community Bank, 328 Ill.App.3d 696, 704 (1st Dist. 2002).

However, an exception exists where the circumstances suggest that a plaintiff may have justifiably relied on the opinion as though it was a statement of fact. Schrager, 328 Ill.App.3d at 704. A statement that appears to be an opinion when standing alone, may in fact be a statement of fact for purposes of fraud when evaluated in context and in light of all the facts and circumstances of a case. Illinois Jurisprudence, Personal Injury and Torts § 13:06. Illinois courts consider the following factors to help determine whether a statement is one of fact or opinion: the sophistication of the parties; the accessibility of outside information; and whether the speaker has held himself or herself out to have special knowledge. Id.

Wherever a party states a matter which might otherwise be only an opinion, but does not state it as the expression of his own opinion, but as an affirmative fact material to the transaction, the statement clearly becomes an affirmation of the fact within the meaning of the rule against fraud. Schrager, 328 Ill.App.3d at 704. Therefore, the First District Illinois Appellate Court held that the general rule of analyzing whether a statement is one of fact or opinion is that it is the sense in which the statement is reasonably understood, not the form of the statement which is important or controlling. Id. Whether a statement is one of fact or of opinion depends on all the facts and circumstances of a particular case. Illinois Jurisprudence, Personal Injury and Torts § 13:06.

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 , Fraud

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The Illinois First District Appellate Court held that to state a cause of action for false light invasion of privacy, the plaintiff must prove that: (1) the plaintiff was placed in a false light before the public as a result of the defendant's actions; (2) the false light in which the plaintiff was placed would be highly offensive to a reasonable person; and (3) the defendant acted with actual malice, that is, with knowledge that the statements were false or with reckless disregard for whether the statements were true or false. Brennan v. Kadner, 351 Ill.App.3d 963, 971 (1st Dist. 2004).

For purposes of establishing a cause of action for false light invasion of privacy, Illinois courts have adopted the “actual malice ” rule. Dubinsky v. United Airlines Master Executive Council, 303 Ill.App.3d 317, 330 (1st Dist. 1999). Actual malice has been defined by the Illinois Supreme Court as “knowledge that the statements made by a defendant were false or that such statements were made with reckless disregard as to their truth or falsity.” Poulos v. Lutheran Social Services of Illinois, Inc., 312 Ill.App.3d 731, 741 (1st Dist. 2000). To sustain a cause of action for false light invasion of privacy, the plaintiff must prove actual malice by clear and convincing evidence. Illinois Jurisprudence, Personal Injury and Torts § 17:48.

Furthermore, the actual malice requirement is premised on the nature of the false light tort as involving intentional wrongdoing and outrageous conduct. Illinois Jurisprudence, Personal Injury and Torts § 17:48. Thus, in false light invasion of privacy cases, it is not necessary to determine whether the plaintiff is a private or public figure, as is required in some defamation cases, because actual malice must be proven regardless of whether the plaintiff is a private or public figure. 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 , False Light Invasion of Privacy

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Illinois courts have held that statements concerning future intent or conduct are not actionable as fraud. Illinois Non-Profit Risk Management Ass'n v. Human Service Center of Southern Metro-East, 378 Ill.App.3d 713, 723 (4th Dist. 2008). In most cases, a defendant must make representations about past or existing facts in order to create actionable fraud. Illinois Jurisprudence, Personal Injury and Torts § 13:08. Generally, representations or predictions about intention or future conduct are not actionable as fraud. Id. Illinois courts have held that a promise to do something in the future, generally, will not constitute actionable fraud, even if made with the intention not to perform. Id.

However, there is an exception that exists where Illinois courts have found fraud in future promises. Chatham Surgicore, Ltd. v. Health Care Service Corp., 356 Ill.App.3d 795, 804 (1st Dist. 2005). A promise to perform an act in the future made by one who intends not to perform does not constitute actionable fraud, unless the false promise of future performance is part of a scheme or device to defraud another. Id. In order to comprise fraud, the promise must be part of a scheme to commit fraud, or a fraudulent device. Illinois Jurisprudence, Personal Injury and Torts § 13:08. Illinois courts warn that it is difficult to distinguish between a promise made with an intent not to perform, and one made as part of a pre-existing fraudulent scheme. Id. Proof of the fraud scheme exception to the general rule for future promises requires a statement made with an intent to induce reliance and actual reliance. 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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Generally, statements as to value do not constitute actionable fraud. Illinois Jurisprudence, Personal Injury and Torts § 13:07. Statements concerning value are ordinarily deemed as an opinion of the party making the representation. Id. While it may be true that a bare statement as to value is ordinarily deemed the opinion of the party making the representation, such a statement may be a positive affirmation of a fact, intended as such by the party making it, and reasonably regarded as such by the party to whom it is made. Id. Therefore, Illinois courts have held that the general rule for statements of value is that where a statement of value is part of a scheme to induce a plaintiff to act, a cause of action for fraud may exist. Id.

In addition, the Illinois First District Appellate Court has held that puffing cannot be the subject of an actionable fraud claim. Miller v. William Chevrolet/GEO, Inc., 326 Ill.App.3d 642, 649 (1st Dist. 2001). Illinois courts have defined “puffing” as a bare statement as to the value of a product. Id. However, statements of existing facts or comments that ascribe specific virtues to a product are not generally considered puffing and may be the subject of a fraud claim. Illinois Jurisprudence, Personal Injury and Torts § 13:07.

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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The Illinois First District Appellate Court has held that to state a cause of action for fraud, a plaintiff must prove the following elements: (1) a false statement of material fact; (2) defendant's knowledge that the statement was false; (3) defendant's intent that the statement induce the plaintiff to act; (4) plaintiff's reliance upon the truth of the statement; and (5) plaintiff's damages resulting from reliance on the statement. Fox v. Heimann, 375 Ill.App.3d 35, 47 (1st Dist. 2007). Essential to establishing a cause of action for fraud is intent by the defendant to deceive, to mislead, or to convey a false impression. Szajna v. General Motors Corp., 115 Ill.2d 294, 322 (1986).

The concept of fraud implies a wrongful intent, that is, an act or concealment which is calculated to deceive. Cokinis v. Maywood-Proviso State Bank, 81 Ill.App.3d 1057, 1063-1064 (1st Dist. 1980). The intent to deceive can be found from the fact that a person makes a statement knowing it to be false when the statement is made for the purpose of inducing the one to whom the statement is made to act. Szajna, 115 Ill.2d at 322-323. A statement is fraudulent when, to the knowledge or belief of its utterer, it is false in the sense in which it is intended to be understood by the recipient. Miller v. Lockport Realty Group, Inc., 377 Ill.App.3d 369, 377 (1 Dist. 2007). Also, Illinois courts generally have held that the intent to deceive is present when the statement is made without any belief that it is true or with a reckless disregard as to whether it is true or false. Szajna, 115 Ill.2d at 322-323.

Proof of intent to deceive will be found where a person knowingly makes a false statement for the purpose of inducing another to take action. Illinois Jurisprudence, Personal Injury and Torts § 13:15. The defendant need not have had a specific intent to cause a pecuniary loss in order to commit fraud. Id. The relevant issue is simply whether the defendant intended to induce reliance on the misrepresentation. 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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The Illinois First District Appellate Court has defined “constructive fraud” as any act, statement or omission which amounts to positive fraud or which is construed as fraud by the courts because of its detrimental effect upon public interests and public or private confidence. Small v. Sussman, 306 Ill.App.3d 639, 646 (1st Dist. 1999). Essentially, constructive fraud is a breach of a legal or an equitable duty which, irrespective of the moral guilt of the wrongdoer, Illinois courts declare as fraudulent because of its tendency to deceive others. Prodromos v. Everen Securities, Inc., 341 Ill.App.3d 718, 726 (1st Dist. 2003). A cause of action for constructive fraud requires neither actual dishonesty, nor intent to deceive. Cessna v. City of Danville, 296 Ill.App.3d 156, 168 (4th Dist. 1998). On the other hand, a cause of action for constructive fraud can be inferred from the circumstances regardless of any actual dishonesty of purpose. Id.

Constructive fraud can arise only if there is a confidential or fiduciary relationship between the parties. Prodromos, 341 Ill.App.3d at 726. In Illinois, a fiduciary relationship arises when one has influence over a person through the trust and confidence of that person, such as where a person solicits trust by holding himself or herself out as an expert. Illinois Jurisprudence, Personal Injury and Torts § 13:02. In a fiduciary relationship, where there is a breach of a legal or equitable duty, a presumption of fraud arises. Id. Where there has been a breach of a fiduciary duty, a cause of action can lie in constructive fraud. Id.

Once the party claiming constructive fraud has established the existence and breach of a confidential or fiduciary relationship between the parties, the burden of proof shifts to the opposing party to produce evidence to negate the existence and breach of a confidential or fiduciary relationship. Illinois Jurisprudence, Personal Injury and Torts § 13:36. If the opposing party is successful in negating the existence and breach of a confidential or fiduciary relationship, the cause of action for constructive fraud ceases to exist and the party claiming constructive fraud has the burden of proving fraud. 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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Under the Illinois Deceptive Trade Practices Act, “a person engages in a deceptive trade practice when, in the course of his or her business, vocation, or occupation, the person disparages the goods, services, or business of another by false or misleading representation of fact.” 815 ILCS 510/2.

A claim for commercial disparagement under the Illinois Deceptive Trade Practices Act may be stated where the plaintiff alleges that the defendant knowingly and intentionally made false or misleading statements to one or more actual or potential customers of the plaintiff. Illinois Jurisprudence, Commercial Law § 21:6. In addition, to prove a cause of action for commercial disparagement, under the Illinois Deceptive Trade Practices Act, a plaintiff must prove that: (1) the defendant intends for the publication of the statement to result in harm to the interests of the plaintiff having a pecuniary value, or either recognizes or should have recognized that it is likely to do so; and (2) the defendant knows the statement is false or acts in reckless disregard of its truth or falsity. Illinois Jurisprudence, Personal Injury and Torts § 11:82. Statements that may satisfy the requirement of false or misleading statements may be made to the effect that the plaintiff's products were unsatisfactorily made, unsafe, ineffective, and poorly designed; or that the plaintiff would not be able to perform in accordance with prior assurances of promised delivery schedules or other critical service-related concerns of customers. Illinois Jurisprudence, Commercial Law § 21:6.

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.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a Chicago-based business litigation and business law firm. The law firm represents clients in a broad range of business disputes. Attorneys Walid J. Tamari and Grant Blumenthal are the law firm’s co-managing partners.

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Posted In: Business Litigation , Commercial Disparagement , Defamation , Illinois Deceptive Trade Practices Act

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The First District Illinois Appellate Court has held that to state a cause of action for the common law tort of commercial disparagement, a plaintiff must prove that the defendant made a false and demeaning statement regarding the quality of plaintiff's goods and services. Schivarelli v. CBS, Inc., 333 Ill.App.3d 755, 766 (1st Dist. 2002). Moreover, an Illinois appellate court defined an action for common law commercial disparagement as “a statement about a competitor's goods or services which are untrue or misleading and are made to influence or tend to influence the public not to buy those goods or services.” Pekin Ins. Co. v. Phelan, 343 Ill. App. 3d 1216, 1220 (3d Dist. 2003).

Although commercial disparagement is similar to defamation of personal reputation in that both require a false statement to a third party which causes harm to the plaintiff, Illinois courts have recognized commercial disparagement as a tort separate and distinct from the tort of defamation. Imperial Apparel, LTD v. Cosmo's Designer Direct, Inc., 367 Ill.App.3d 48, 60 (1st Dist. 2006); 1-10 Illinois Tort Law § 10.02. A defamation action may lie when there is a false statement regarding the integrity of a business. Id. Whereas, an action for commercial disparagement lies when there is a false statement that demeans the quality of a business’ goods or services. Id. Moreover, defamation protects a personal interest in reputation, where as, commercial disparagement protects a property interest. 1-10 Illinois Tort Law § 10.02. In order to have a cause of action for commercial disparagement, the false statement that is the basis of the action must be directed at the products and services of a business rival. Illinois Jurisprudence, Commercial Law § 21:6. However, Illinois courts have found that “when a statement impugn the quality of goods and the integrity of a business, both an action for defamation and an action for commercial disparagement may lie.” Imperial Apparel, LTD, 367 Ill.App.3d at 60.

Commercial disparagement has consistently been applied to statements which disparage the quality of one's goods or services. Crinkley v. Dow Jones and Co., 67 Ill.App.3d 869, 876 (1st Dist. 1978). Common law commercial disparagement, which is a defamation of the quality of one's goods or services, requires proof that the statement be false. Soderlund Bros., Inc. v. Carrier Corp., 278 Ill.App.3d 606, 619-620 (1st Dist. 1995). In addition, commercial disparagement actions require a showing of malice and that defendant knew the statement to be false or acted in reckless disregard of its truth or falsity. Id. Furthermore, the plaintiff must allege some identified or identifiable third party which the disparaging statement was communicated to by the defendant, with whom the plaintiff had an expectancy of doing business. Suhadolnik v. City of Springfield, 184 Ill.App.3d 155, 184 (4th 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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Tortious interference with a contract recognizes that a person's business relationships constitute a property interest, and as such are entitled to protection from unjustified tampering by another. The Film and Tape Works, Inc. v. Junetwenty Films, Inc., 368 Ill.App.3d 462, 468 (1st Dist. 2006). The Illinois First District Appellate Court held in order to state a cause of action for tortious interference with a contract, the plaintiff must allege: (1) the existence of a valid and enforceable contract between the plaintiff and a third party; (2) defendant's awareness of the contract; (3) defendant's intentional and unjustified inducement of a breach; (4) defendant's wrongful conduct caused a subsequent breach of the contract by the third party; and (5) damages. Purmal v. Robert N. Wadington and Associates, 354 Ill.App.3d 715, 727 (1st Dist. 2004).

The first element for the tort of interference with contractual rights requires the existence of a valid and enforceable contract between the plaintiff and another. Illinois Jurisprudence, Personal Injury and Torts § 14:04. The general rule that a person cannot sue for interference with a contract that is unenforceable has been applied only to contracts that are void from their inception due to their subject matter or the lack of the necessary formation requisites. Id. Furthermore, a cause of action for tortuous interference with a contract does not exist where a party seeking to bring the claim is, in fact, a party of the contractual relationship, which the claim is based upon. Cress v. Recreation Services, Inc., 341 Ill.App.3d 149, 176 (2d Dist. 2003).

The second element for the tort of interference with a contract requires the defendant to have knowledge of the contract. Purmal, 354 Ill.App.3d at 727. For purposes of pleading a cause of action for interference with contract, the plaintiff need only allege the defendant's knowledge of the contract. Guice v. Sentinel Technologies, Inc., 294 Ill.App.3d 97, 110 (1st Dist. 1997). “The exact date upon which knowledge of the existence of a contract was acquired by the defendant is irrelevant, provided that the acquisition of such knowledge preceded the alleged conduct of interference.” Guice v. Sentinel Technologies, Inc., 294 Ill.App.3d 97, 110 (1st Dist. 1997).

The third element for a cause of action of interference with a contract requires the plaintiff to establish that the defendant intentionally and unjustifiably induced the third party to breach the contract. Illinois Bell Telephone Co. v. Plote, Inc., 334 Ill.App.3d 796, 806 (1st Dist. 2002). The element of intentional and unjustified inducement of a breach of the contract requires the intentional and malicious inducement of the third person to breach the contract. Illinois Jurisprudence, Personal Injury and Torts § 14:05. “The test for inducement requires an intention on the part of the actor to interfere with another's contractual relations. To do so, he or she must know of the existence of the contract with which he or she interferes. Establishing inducement requires some active persuasion, encouragement, or inciting that goes beyond merely providing information in a passive way.” Id.

The fourth element for a cause of action of interference with a contract requires that the defendant's wrongful conduct caused a subsequent breach of the contract by the third party. Purmal, 354 Ill.App.3d at 727. The breach element requires either a breach of contract, a termination of contractual relations, or a rendering performance impossible. Illinois Jurisprudence, Personal Injury and Torts § 14:06. There need not be a termination or breach of the contract before a cause of action for interference with a contract exists. Id. The plaintiff must show that the contract was in fact breached or that a breach is imminent. 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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An adhesion contract is a standardized form agreement prepared entirely by one of the parties and submitted to another party for acceptance without any opportunity to negotiate terms. Endsley v. City of Chicago, 319 Ill.App.3d 1009, 1019 (1st Dist. 2001). Further, a contract of adhesion is a contract that is offered on a take-it-or-leave-it basis to a party who has no bargaining power and no ability to change the terms of the contract. Wigginton v. Dell, Inc., 890 N.E.2d 541, 546 (5th Dist. 2008). Therefore, a contract of adhesion exists where one party has absolutely no bargaining power or ability to change the contract terms. Hubbert v. Dell Corp., 359 Ill.App.3d 976, 987 (5th Dist. 2005).

Where there is disparity in bargaining power, the drafter may essentially require the other party, or "adherer," to accept or reject the form contract on a "take it or leave it" basis. Illinois Jurisprudence, Commercial Law § 1:4. Whether a contract is one of adhesion is itself a question of fact. Id. Burdensome clauses in adhesion contracts generally should be construed against the drafter of the contract.

Illinois courts have held that contracts of adhesion are generally lawful and "mere disparity of bargaining power is not sufficient grounds to vitiate contractual obligations.” Endsley v. City of Chicago, 319 Ill.App.3d 1009, 1019 (1st Dist. 2001). To vitiate a contractual obligation under an adhesion contract, something more than mere disparity in bargaining power is required. Illinois Jurisprudence, Commercial Law § 1:4. To determine whether a contract of adhesion is enforceable, Illinois courts look to two factors: the reasonable expectations of the adhering party and whether the contract is unconscionable. Hutcherson v. Sears Roebuck & Co., 342 Ill.App.3d 109, 120 (1st Dist. 2003). Thus, Illinois courts may declare adhesion contracts unlawful where the party in the superior bargaining position has taken unfair advantage of the adherer by making the desired product or service available only if the weaker party accedes to the form of the contract. Illinois Jurisprudence, Commercial Law § 1:4. Therefore, unfair advantage is the key to differentiating between lawful and unlawful adhesion contracts. Id.

Contracts of adhesion, typified by terms that are nonnegotiable and presented in fine print in language that the average consumer might not fully understand are not per se unenforceable from a procedural standpoint. Tortoriello v. Gerald Nissan of N. Aurora, Inc., 379 Ill.App.3d 214, 233 (2d Dist. 2008). Some additional coercion or overreaching is necessary. Id. The Illinois First District Appellate Court held that when contracts of adhesion are in a standardized form agreement and are submitted to a party for acceptance without any opportunity to negotiate the terms, the mere fact that one party to a contract enjoyed little relative bargaining strength cannot alone render a contractual provision unenforceable. Larned v First Chicago Corp., 264 Ill.App.3d 697 (1st Dist. 1994). However, a contractual clause that is part of a standardized form agreement may have some of its significance reduced because of the inequality in the parties' bargaining power. Williams v. Illinois State Scholarship Commission, 139 Ill.2d 24, 72 (1990).

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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For a contract to be legally binding, it must be supported by consideration. Illinois Jurisprudence, Commercial Law § 1:32. Illinois courts have held that consideration is one of the requirements to prove that a valid contract exists. Meyers v. Woods, 374 Ill.App.3d 440, 450 (3d Dist. 2007).

Whether there is sufficient consideration to establish that a valid contract exists is a question of law. Illinois Jurisprudence, Commercial Law § 1:34. The burden of proving that there is sufficient consideration is on the party seeking to enforce the contract. Id. The sufficiency of consideration must be evaluated as it relates to the entire record, not as perceived in a vacuum of either terms or definitions. Illinois Jurisprudence, Commercial Law § 1:35. The burden of proving the sufficiency of consideration is upon the party asserting it. Id.

Generally, Illinois courts will not inquire into the sufficiency of the consideration to support a contract. United City of Yorkville v. Village of Sugar Grove, 376 Ill.App.3d 9, 22 (2d Dist. 2007). As long as the consideration is a bargained-for exchange, the amount the parties assign to a particular asset constitutes legally adequate consideration. Illinois Jurisprudence, Commercial Law § 1:36. Moreover, Illinois courts have held that a court's inquiry into whether a contract is supported by consideration does not extend to examining the adequacy or sufficiency of the consideration. Gavery v. McMahon & Elliott, 283 Ill.App.3d 484, 490 (1st Dist. 1996). Illinois courts have stated that it is not a court's function to review the amount of consideration. Id.

Moreover, Illinois courts have held that mutual and concurrent promises provide sufficient legal consideration to support each other. Solimini v. Thomas, 293 Ill.App.3d 430, 437 (2d Dist. 1997). Where there is no other consideration for a contract, the mutual promises of the parties constitute the consideration. Illinois Jurisprudence, Commercial Law § 1:48. However, these promises must be binding on both parties, or the contract fails. Id. If a promise is merely illusory, in that it does not bind one party, that promise will not constitute consideration and will not support a contract. Id.

However, Illinois courts have held that where the amount of consideration is so grossly inadequate as to shock the conscience of the court, the consideration is insufficient and the contract will fail. United City of Yorkville, 376 Ill.App.3d at 22. Upon such inquiry, adequacy and sufficiency of consideration is to be determined as of the time the parties entered into the contract. Illinois Jurisprudence, Commercial Law § 1:36. Evidence of gross inadequacy of consideration has been considered by some Illinois courts as tantamount to fraud, whether actual or constructive. Illinois Jurisprudence, Commercial Law § 4:16. Mere inadequacy of consideration, in the absence of fraud or unconscionable advantage, ordinarily is insufficient to justify setting aside a contract. Gavery, 283 Ill.App.3d at 490-91.

Illinois courts have found that consideration does not exist where a promise to do something one is already obligated to do. Illinois Jurisprudence, Commercial Law § 1:40. The pre-existing duty rule provides that where a party does what it is already legally obligated to do, there is no consideration as there is no detriment. Id. Illinois courts have held that consideration cannot flow from an act performed pursuant to a pre-existing legal duty. Id. Furthermore, consideration is not insufficient merely because it is a conditional promise, even though the controlling event may never occur. Illinois Jurisprudence, Commercial Law § 1:38. Where the consideration is a party's promise to perform in the future, the consideration does not fail because of non-performance, since the promise, and not the performance, is the real consideration. 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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In a recent First District Illinois Appellate Court decision, the court addressed the issue of whether a party who proves it was fraudulently induced to enter into a contract can rescind the contract as an equitable remedy. 23-25 Bldg. Partnership v. Testa Produce, Inc., 381 Ill.App.3d 751 (1st Dist. 2008). In the 23-25 Bldg. Partnership v. Testa Produce, Inc., both parties owned property in a Chicago subdivision. Id. An outside buyer allegedly agreed to purchase the entire Chicago subdivision if all the unit-owners agreed to sell. Id. The defendants allegedly agreed to pay the plaintiffs $50,000.00, as an inducement to agree to the sale. Id. After the sale was complete, the defendants allegedly refused to pay the $50,000.00, contending the plaintiff fraudulently misrepresented that it needed the money because it was “upside down” in its mortgage. Id. As a result, the plaintiffs brought a breach of contract action against the defendants. Id. At trial, the Cook County trial court entered judgment for the plaintiff, holding that even though the defendants had been allegedly fraudulently induced into entering into the agreement, they could not rescind the contract because they benefited from the plaintiffs’ performance of its obligations under the contract and because the parties could not be returned to their pre-contract position. Id.

On appeal, the First District Illinois Appellate Court reversed the Cook County trial court, held that rescission was an available remedy because sufficient evidence allegedly established that the plaintiffs fraudulently induced the agreement, and that the defendants would not be required to comply with the terms of the contract based on the fact that it benefited from it. Id.

To establish an equitable claim for rescission of a contract on the basis of fraud and/or misrepresentation, a party must prove: (1) a false statement of material fact; (2) known or believed to be false by the party making it; (3) intended to induce the injured party to act; (4) acted on by the injured party in reliance on the truth of the representation; and (5) resulting in damage. Id. To warrant rescission of a contract induced by the misrepresentation, the misrepresentation must be “material,” meaning that the injured party would have acted differently had he been aware of the falsity of the statement, or the person making it knew the statement was likely to induce the injured party to engage in the conduct in question. Id. The court found that the plaintiffs allegedly induced defendants to enter into the agreement through a fraudulent, material misrepresentation that the sale price would not satisfy its outstanding mortgage. Id.

A contract induced by fraud or misrepresentation is not void but is voidable at the election of the injured party. Id. Although the perpetrator of the fraud or misrepresentation cannot enforce a contract that is voidable due to fraudulent inducement, the injured party may: (1) rescind the contract, or (2) waive the defect, ratify the contract, and enforce it. Id. Rescission, an equitable remedy, is the canceling of a contract so as to restore the parties to their initial status. Id. Usually, a party seeking rescission must restore the other party to the status quo prior to entering into the contract. Id. As a prerequisite, restoration of the status quo requires the rescinding party to return any consideration it received from the other party under the contract. Id.

However, where restoration of the status quo is impossible, it does not necessarily preclude rescission of a contract. Id. Restoration of the status quo, as a prerequisite to rescission of a contract, will not be required when restoration has been rendered impossible by circumstances not the fault of the party seeking rescission, and the party opposing the rescission has obtained a benefit from the contract. Id. Where restoration of the other party to the status quo is impossible, the party seeking rescission of a contract generally must reimburse the other party for the value of the benefit it received under the contract. Id.

In conclusion, the First District Illinois Appellate Court held that because the plaintiffs allegedly fraudulently induced the defendants to enter into an agreement, the agreement can be rescinded, despite the impossibility of returning the plaintiffs to the status quo prior to entering into 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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When appropriate, in Illinois, Duress is sometimes used as a defense against the enforcement of a contract. To establish duress, it must be shown that the act or threat left the individual bereft of the quality of mind essential to the making of a contract. Inland Land Appreciation Fund, L.P. v. County of Kane, 344 Ill.App.3d 720, 727 (2d Dist. 2003). The acts or threats complained of must be wrongful; however, the term “wrongful” is not limited to acts that are criminal, tortious, or in violation of a contractual duty, but extends to acts that are wrongful in a moral sense as well. Id.

Illinois courts have held that the test for duress is whether an act has left the individual bereft of the quality of mind essential to make a contract, which is an objective test. Illinois Jurisprudence, Commercial Law § 1:91. There must be such compulsion as to show that the execution of the contract was not the voluntary act of the maker and it must be present and operate at the time the instrument was executed. Id. The question of duress is one of fact in each particular case, to be determined upon consideration of the surrounding circumstances, such as age, capacity, situation and relation of the parties. Illinois Jurisprudence, Commercial Law § 1:91.

Moreover, Illinois courts have held that any wrongful threat that actually puts the victim in such fear as to act against his or her will constitutes duress. Illinois Jurisprudence, Commercial Law § 1:93. Thus, where the parties are not dealing at arm's length, but one of them is in a position to dictate, the courts may treat agreements that are influenced by threats of injury to, or the withholding of, property as made under duress. Id. And the threats of a party may constitute duress where their undoubted effect was to undermine the ability of another to refuse to execute an agreement. Id.

A contract executed under duress is not void, but is voidable at the option of the coerced party. Illinois Jurisprudence, Commercial Law § 1:92. Because duress requires that a party be deprived of free will and bereft of the quality of mind essential to make a contract, an agreement will not be voided if the plaintiff had an option or choice as to whether or not to do the thing or perform the act said to have been done under duress. Id. Mere advice, argument, or persuasion does not constitute duress if the individual acts freely in executing the questioned documents. Illinois Jurisprudence, Commercial Law § 1:93. The use or threatened use of civil proceedings to enforce a claim is not considered duress, where made in the honest belief that a good cause of action exists. Illinois Jurisprudence, Commercial Law § 1:94. Further, it is not duress for a party to a contract to act upon a plausible, even if uncertain, interpretation of its rights. Id.

A demand is not duress unless it is “wrongful” in the sense that it violates the law, a contract, or morality. Crossroads Ford Truck Sales, Inc. v. Sterling Truck Corp., 341 Ill.App.3d 438, 446 (4th Dist. 2003). Duress cannot be predicated upon a demand that is lawful or a threat to do something that a party has a legal right to do. Id. Further, a finding of duress is less likely if the party has the assistance of counsel and adequate time to consider the proposed contractual terms. Krilich v. American Nat. Bank and Trust Co. of Chicago, 334 Ill.App.3d 563, 540 (2 Dist. 2002).

A victim of duress who accepts the benefits flowing from the contract for any considerable length of time ratifies the contract. Inland Land Appreciation Fund, L.P. v. County of Kane, 344 Ill.App.3d 720, 728 (2d Dist. 2003). Ratification results if the party who executed the contract under duress accepts the benefits flowing from it or remains silent or acquiesces in the contract for any considerable length of time after opportunity is afforded to annul or void it. Illinois Jurisprudence, Commercial Law § 1:92.

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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An issue in Illinois courts is whether a mistake, mutual or unilateral, between the parties of a contract can be grounds for rescission of an agreement. A mutual mistake occurs when an actual good-faith agreement is reached, but, due to error, the written reduction of the agreement violates the understanding of both parties. Cameron v. Bogusz, 305 Ill.App.3d 267, 272 (1st Dist. 1999). The reason for relief is that the misunderstanding precluded mutual assent to the terms of the contract. Illinois Jurisprudence, Commercial Law § 1:97.

The party asserting mutual mistake as grounds to rescind a contract must show that both parties were mistaken as to a material matter at the time the contract was entered into. Cameron, 305 Ill.App.3d at 272. Illinois courts require the plaintiff to prove the following elements for the court to grant rescission based on mutual mistake: (1) the mistake must have existed at the time the contract was entered into; (2) the mistake must have been mutual and common to all the parties; (3) the mistake must have involved a material matter; and (4) the mistake must have been such that the parties intended to say one thing but by the written instrument expressed another. Illinois Jurisprudence, Commercial Law § 1:97. To invalidate an agreement, a mistake must relate to a past or present fact material to the contract. United City of Yorkville v. Village of Sugar Grove, 376 Ill.App.3d 9, 24-25 (2d Dist. 2007). Illinois courts usually hold that predictions do not qualify as such present facts, and thus, mistaken predictions will not invalidate a contract. Id.

On the other hand, unilateral mistake, as a general rule, Illinois courts will not grant relief if only one party to a contract has made a mistake, especially where that party’s own negligence and lack of prudence caused the mistake. Illinois Jurisprudence, Commercial Law § 1:98. However, Illinois courts will allow a contract to be rescinded for unilateral mistake if: (1) the mistake relates to a material feature of the contract; (2) it occurred despite the exercise of reasonable care; (3) it is of such grave consequence that enforcement of that contract would be unconscionable; and (4) the other party can be returned to the same position it was in before the contract was entered into. Cameron, 305 Ill.App.3d at 274. The standard of care applied to the mistaken party where that party seeks to rescind the contract on the ground of unilateral mistake is whether a person of reasonable prudence would have acted in the same manner under the same circumstances. Illinois Jurisprudence, Commercial Law § 1:98.

Illinois courts will generally grant relief for unilateral errors that are clerical or mathematical. Illinois Jurisprudence, Commercial Law § 1:98. A contract fairly entered into cannot be rescinded on the ground of unilateral mistake merely because it is less profitable to one party than anticipated when he or she entered into it. Id. Nor can a party rescind a contract simply because of a mistaken opinion as to its legal effect. Id.

Unilateral mistakes in a party's assumptions as to cost to be incurred for performance of contract will not be cause for rescinding the contract. Bond Drug Co. of Illinois v. Amoco Oil Co., 274 Ill.App.3d 630, 635 (1st Dist. 1995). Illinois courts have held that each party assumes risk that its assumption as to cost of performance was wrong, and thus, the contract fairly entered into cannot be avoided or disregarded by one party upon discovery that the contract is less profitable than anticipated at the time of execution of 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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An issue in Illinois is what constitutes a sufficient offer and acceptance to establish a valid and enforceable contract. To prove that a valid contract exists, a party must prove the following elements: (1) offer; (2) acceptance; and (3) consideration. Meyers v. Woods, 374 Ill.App.3d 440, 450 (3d Dist. 2007). To prove an enforceable contract, a party must additionally prove that the agreement is sufficiently definite so that its terms are reasonably certain and able to be determined, and a meeting of the minds or mutual assent to the terms of the contract. Van Der Molen v. Washington Mut. Finance, Inc., 359 Ill.App.3d 813, 823 (1st Dist. 2005); In re Marriage of Murphy, 359 Ill.App.3d 289, 301 (3d Dist. 2005).

Mutual assent is proven when both parties assent to the same thing in the same sense, and their minds must meet on the essential terms and conditions of the agreement. Illinois Jurisprudence, Commercial Law § 1:16. Mutual assent may be manifested by the language employed by the parties or by their words or acts. Id. To satisfy the meeting of the minds requirement, it is not necessary that the parties share a subjective understanding as to the terms of the contract. Id. Rather, it is sufficient that their conduct indicates an agreement to those terms. Id. The intention of the parties gives character to the transaction, and if either party contracts in good faith, that party is entitled to the benefit of the contract, no matter what may have been the intention of the other party. Id.

An offer is an act on the part of one person giving another person the legal power to create the type of obligation necessary for a contract. Illinois Jurisprudence, Commercial Law § 1:19. Illinois courts have held that in order for a valid contract to be formed, an offer must be so definite as to its material terms or require such definite terms in the acceptance that the promises and performances to be rendered by each party are reasonably certain. In re Marriage of Murphy, 359 Ill.App.3d 289, 300-301 (3d Dist. 2005). If a contract offer does not state a definite limitation on the time period for its acceptance, it will lapse if not accepted within a reasonable time. Kalis v. Colgate-Palmolive Co., 357 Ill.App.3d 172, 175 (1st Dist. 2005). Whether a party's acceptance has come within a reasonable time “depends upon a multiplicity of circumstances” and should be resolved by the trier of fact. Id.

Illinois courts have held to be a valid acceptance, it must be objectively manifested, for otherwise no meeting of the minds would occur. Cowger v. Industrial Com'n, 313 Ill.App.3d 364, 370 (5th Dist. 2000). To create an enforceable contract, there must be an unequivocal acceptance. Illinois Jurisprudence, Commercial Law § 1:24. There can be no contract where the offeror cannot reasonably treat the offeree's response as an acceptance. Id. Furthermore, an offer cannot be accepted by one to whom it is not made. Illinois Jurisprudence, Commercial Law § 1:25. Because an offeror has a right to determine with whom he or she will contract, a non-offeree cannot be forced upon the offeror without consent. Id. There is no acceptance until the offeree notifies the offeror of the acceptance, or at least employs reasonable diligence in attempting to do so. Illinois Jurisprudence, Commercial Law § 1:26. Thus, it is well-established by Illinois courts that in order to constitute a contract by offer and acceptance, the acceptance must conform exactly to the offer. Finnin v. Bob Lindsay, Inc., 366 Ill.App.3d 546, 548 (3d Dist. 2006).

An offeror has complete control over an offer and may condition acceptance on the terms prescribed in the offer. Illinois Jurisprudence, Commercial Law § 1:27. The language of an offer may govern the place, time or manner of acceptance required, in which case the acceptance must strictly comply with these terms in order to create a contract. Id. Thus, where an offer requires a written acceptance, no other mode may be used. Id. On the other hand, if an offer merely suggests a method of acceptance, it does not preclude a different method. Id.

A well-established rule of Illinois contract law is that a counteroffer rejects an offer only when made before a contract is formed. Patel v. McGrath, 374 Ill.App.3d 378, 383 (2d Dist. 2007). Under Illinois contract law, an acceptance requiring any modification or change in terms to the original offer constitutes a rejection of the original offer and becomes a counteroffer that must be accepted by the original offeror before a valid contract is formed. Finnin v. Bob Lindsay, Inc., 366 Ill.App.3d 546, 548 (3d Dist. 2006). Responding to an offer with a counter-offer constitutes a rejection of the original offer. People v. Henderson, 211 Ill.2d 90, 103-104 (2004). Moreover, a conditional acceptance of an offer is not a sufficient acceptance, rather, the conditional acceptance becomes a counteroffer to the original offer. Karris v. U.S. Equities Development, Inc., 376 Ill.App.3d 544, 550 (1st Dist. 2007). An offer deemed rejected due to the proffering of a counteroffer or conditional acceptance cannot be revived by a later acceptance. Henderson, 211 Ill.2d at 103-104 (2004).

An offer can be accepted by the performance of a desired act. Illinois Jurisprudence, Commercial Law § 1:30. An offeree may also be regarded as having accepted a tendered contract offer by accepting the benefits of the contract. Id. Conduct may suffice to show acceptance of the terms of an offer. Illinois Jurisprudence, Commercial Law § 1:30. A party named in a contract may, by its acts, indicate its acceptance of the contract's terms and become bound by its provisions. Id. However, for a course of conduct to act as acceptance, it must be clear that the conduct relates to the specific contract in question. Id. The law ordinarily treats the offeree's silence or failure to decline a proposal as rejection, not acceptance, of an offer. Illinois Jurisprudence, Commercial Law § 1:31. However, circumstances such as the nature of previous dealings between the parties may make it reasonable for the offeror to construe silence as acceptance. Id. For this purpose, a single previous transaction does not establish a course of conduct or course of dealing sufficient to constitute an implied acceptance based on silence. Id. Generally, a contract is operative as such from the time when there is a meeting of the minds, or when the last act necessary for its completion is performed. Illinois Jurisprudence, Commercial Law § 1:15.

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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A misappropriation of trade secret occurs when a person acquires or discovers a trade secret by improper means, or discloses or uses a trade secret in breach of a duty of confidentiality imposed on him by the nature of his relationship with the owner of the trade secret and the owner of the trade secret is damaged by this improper acquisition, disclosure or use. American Antenna Corp. v. Amperex Electronic Corp., 190 Ill.App.3d 535, 538 (2d Dist. 1989). To set forth a cause of action for a violation of the Illinois Trade Secrets Act, a plaintiff must allege facts that the information at issue was: (1) a trade secret; (2) misappropriated; and (3) used in the defendant's business. Arcor, Inc. v. Haas, 363 Ill.App.3d 396, 400 (1st Dist. 2005).

First, the Illinois Trade Secrets Act defines a “trade secret” as ‘information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use, and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality.” 765 ILCS 1065/2(d) (2002). Under case law, Illinois courts have defined a “trade secret” as a secret plan or process, tool, mechanism or compound known only to its owner and those . . . to whom it is necessary to confide it. American Antenna Corp. v. Amperex Electronic Corp., 190 Ill.App.3d 535, 538 (2d Dist. 1989). Furthermore, the First District Illinois Appellate Court has identified six common law factors that courts may consider in determining whether a trade secret exists: (1) the extent to which the information is known outside of the employer's business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken by the employer to guard the secrecy of the information; (4) the value of the information to the employer and to his competitors; (5) the amount of effort or money expended by the employer in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Arcor, Inc. v. Haas, 363 Ill.App.3d 396, 400 (1st Dist. 2005).

Second, under the Illinois Trade Secrets Act, “misappropriation” is defined as an acquisition of a trade secret of a person by another person who knows or has reason to know that the trade secret was acquired by improper means. 765 ILCS 1065/2. The Act also defines “misappropriation” as disclosure or use of a trade secret of a person without express or implied consent by another person who: (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of disclosure or use, knew or had reason to know that knowledge of the trade secret was: (I) derived from or through a person who utilized improper means to acquire it; (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) before a material change of position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake. 765 ILCS 1065/2.

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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Illinois courts have defined a contract “modification” as a change in one or more respects which introduces new elements into the details of the contract, or cancels some of them, but leaves the general purpose and effect undisturbed. Schwinder v. Austin Bank of Chicago, 348 Ill.App.3d 461, 468 (1st Dist. 2004). Modification of a contract normally occurs when the parties agree to modify a contractual provision or to include additional obligations, while leaving intact the overall nature and obligations of the original agreement. Id. Parties to an existing contract may, by mutual assent, modify the purchase contract provided that the modification does not violate law or public policy. Id. Further, parties to a contract are ordinarily as free to change the agreement after making it as they were to make it in the first instance. Id.

In deciding whether to give effect to an attempted contract modification, the analysis does not depend on the nature of the contractual provision at issue. Kinkel v. Cingular Wireless LLC, 223 Ill.2d 1, 14-15 (2006). The First District Illinois Appellate Court has held that a valid modification of a contract must satisfy all the criteria essential for a valid original contract, including offer, acceptance, and consideration. Id. Modification of a contract is itself a contract and only enforceable where ordinary standards of contract law are satisfied. Id. Because, no contract can be modified in ex parte fashion (after the original contract is formed) by one of the contracting parties without the knowledge and consent of the remaining parties to the agreement, mutual assent is therefore, as much a requisite element in effecting a contractual modification as it is in the initial creation of a contract. Id. at 469.

In addition, Illinois courts have held that contractual terms may be modified as long as there is consideration for modification, which may be manifested with some bargained-for exchange between parties. Advance Iron Works, Inc. v. ECD Lincolnshire Theater, LLC, 339 Ill.App.3d 882, 887 (2d Dist. 2003). The essential element of consideration is a bargained-for exchange of promises or performances that may consist of a promise, an act, forbearance, or the creation, modification, or destruction of a legal relation. Ross v. May Co., 377 Ill.App.3d 387, 391 (1st Dist. 2007). A bargained-for exchange exists if one party's promise induces the other party's promise or performance. Id. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.” Id.

A modified contract containing a term inconsistent with a term of the original contract or an earlier contract between the same parties may be interpreted as including an agreement to rescind the inconsistent term in the original or earlier contract. Schwinder, 348 Ill.App.3d at 469. Thus, the modified contract is regarded as creating a new single contract consisting of the terms of the prior contract that the parties have not agreed to change, in addition to the new terms on which they have agreed to change. Id. Furthermore, when a contract is modified or amended by a subsequent agreement, any lawsuit to enforce the contract must be brought on the modified agreement and not on the original agreement. 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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The First District Illinois Appellate Court held that the tort of interference with prospective economic advantage recognizes that a person's business relationships constitute a property interest, and as such, are entitled to protection from unjustified tampering by another. The Film and Tape Works, Inc. v. Junetwenty Films, Inc., 368 Ill.App.3d 462 (1st Dist. 2006). Illinois courts have held to plead a cause of action for tortious interference with prospective economic advantage, a plaintiff must prove: (1) the existence of a valid business relationship or plaintiff's reasonable expectancy of entering into a valid business relationship; (2) defendant's knowledge of the relationship or defendant’s knowledge of the plaintiff’s expectancy to enter into a valid business relationship; (3) intentional interference by defendant inducing termination of the relationship or preventing the expectancy from ripening into a valid business relationship; and (4) damage to plaintiff as a result of the interference. Illinois Jurisprudence, Personal Injury and Torts § 14:12.

In order to allege a reasonable business expectancy, a plaintiff must plead facts to show interference of a business relationship with a specific third party or an identifiable prospective class of third persons. Illinois Jurisprudence, Personal Injury and Torts § 14:13. If the interference is of an incidental nature, rather than an intentional nature, a claim for tortious interference with prospective economic advantage will fail. Illinois Jurisprudence, Personal Injury and Torts § 14:12. Interference with prospective economic advantages requires action toward a third party that results in interference with the prospective relationship. Illinois Jurisprudence, Personal Injury and Torts § 14:13.

Furthermore, interference with prospective economic advantage implies a balancing of societal values, where an individual has a general duty not to interfere in the business affairs of another. The Film and Tape Works, Inc. v. Junetwenty Films, Inc., 368 Ill.App.3d 462 (1st Dist. 2006). However, he may be privileged to interfere, depending on his purpose and methods, when the interference takes a socially sanctioned form, such as lawful competition. The Film and Tape Works, Inc. v. Junetwenty Films, Inc., 368 Ill.App.3d 462 (1st Dist. 2006). In addition, when a business relationship affords the parties no enforceable expectations, but only the hope of continued benefits, the parties must allow for the rights of others, and they therefore have no cause of action against a competitor unless the circumstances indicate unfair competition or an unprivileged interference with prospective advantage. The Film and Tape Works, Inc. v. Junetwenty Films, Inc., 368 Ill.App.3d 462 (1st Dist. 2006). The opportunity to obtain customers is an expectancy protected by the tort of interference with a business expectancy. Illinois Jurisprudence, Personal Injury and Torts § 14:12.

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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Illinois courts have defined the tort of “conversion” as any unauthorized act that deprives a person of his or her property permanently or for an indefinite time. Illinois Jurisprudence, Personal Injury and Torts § 10:01. The essence of a cause of action for conversion is the wrongful deprivation of one who has a right to the immediate possession of the object unlawfully held, or the wrongful deprivation of property from the person entitled to possession. Id. The Illinois Supreme Court held to establish a cause of action for conversion, a plaintiff must prove by a preponderance of the evidence that: (1) the plaintiff has a right to the property; (2) the plaintiff has an absolute and unconditional right to the immediate possession of the property; (3) the plaintiff made a demand for possession; and (4) the defendant wrongfully and without authorization assumed control, dominion, or ownership over the property. Cirrincione v. Johnson, 184 Ill.2d 109, 114 (1998).

The plaintiff must show a right to the property, and an absolute and unconditional right to immediate possession of the property; thus, plaintiff must prove his immediate right of possession as against the defendant. Illinois Jurisprudence, Personal Injury and Torts § 10:08. The third element of a cause of action for conversion requires the plaintiff to make a demand for possession of the property. Cirrincione v. Johnson, 184 Ill.2d 109, 114 (1998). However, Illinois courts are split on whether demand for possession is a requirement to prove conversion. Illinois Jurisprudence, Personal Injury and Torts § 10:09. Illinois courts have held that demand is necessary in all cases in which the defendant is in possession of the property. Id. On the other hand, where some other independent act of conversion can be proven, Illinois courts have held that there is no necessity for a demand by the person claiming ownership or right to possession in order to prove a cause of action for conversion. Id. The First District Illinois Appellate Court stated, “Although demand is often cited as an element of a conversion action, demand is unnecessary where another independent action of conversion is established.” Fortech, L.L.C. v. R.W. Dunteman Co., Inc., 366 Ill.App.3d 804 (1st Dist. 2006). In addition, to satisfy the fourth element of conversion, Illinois courts require that the plaintiff proves that the defendant exercised control over the chattel in a manner inconsistent with the plaintiff's right of possession. Illinois Jurisprudence, Personal Injury and Torts § 10:07. Moreover, there can be no wrongful assertion of dominion or control where the property is voluntarily transferred to the defendant by the plaintiff, even if the transfer was done by mistake. Illinois Jurisprudence, Personal Injury and Torts § 10:10.

The Illinois Supreme Court held that “the subject of conversion is required to be an identifiable object of property of which the plaintiff was wrongfully deprived.” The Film and Tape Works, Inc. v. Junetwenty Films, Inc., 368 Ill.App.3d 462, (1st Dist. 2006); (see In re Thebus, 108 Ill.2d 255, 260 (1985)). However, intangible property rights can be the subject of conversion if they are merged into a tangible document over which the alleged defendant exercised dominion or ownership. The Film and Tape Works, Inc. v. Junetwenty Films, Inc., 368 Ill.App.3d 462, (1st Dist. 2006). Illinois courts have recognized a cause of action for conversion of commercial paper, such as a check, on the theory that the intangible property right was merged into a specific document. Illinois Jurisprudence, Personal Injury and Torts § 10:13. Other types of intangible property that Illinois courts have recognized as merging into a specific document to satisfy the property requirement for conversion are valuable papers, or evidences of title to real or personal property for checks, promissory notes, bank bills, bonds, bills of exchange, drafts, certificates of stock in incorporated companies, securities of any kind, books of account, vouchers, and the like. Id.

Moreover, money may be the subject of conversion, but it must be capable of being described as a specific chattel, although it is not necessary for purposes of identification that money should be specifically earmarked. The Film and Tape Works, Inc. v. Junetwenty Films, Inc., 368 Ill.App.3d 462, (1st Dist. 2006); (see In re Thebus, 108 Ill.2d 255, 260 (1985)); and Illinois Jurisprudence, Personal Injury and Torts § 10:12. Money can be the subject of a claim for conversion provided that it can be described, identified or segregated, and an obligation to treat it in a specific manner is established. Illinois Jurisprudence, Personal Injury and Torts § 10:12. The general rule is that conversion will lie when the plaintiff proves that the money claimed, or its equivalent, at all times belonged to plaintiff and that the defendant converted it to his or her own use. Id. A plaintiff must generally show that he had a right to a specific fund or specific money in coin or bills. Id. Where money withheld to fulfill a debt is specific and identifiable, a conversion claim based on a debt is actionable. Id. However, conversion will not lie for money represented by a general debt or obligation. 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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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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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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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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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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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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In Wartsila NSD North America, Inc. v. Hill International, Inc., an appellate court recently addressed the issue of whether exculpatory clauses operate to bar claims for pure breach of contract. Wartsila Nsd N. Am., Inc. v. Hill Int'l, Inc., 2008 U.S. App. LEXIS 13099 (3d Cir. 2008). In the case, an engineering and construction company, had a consulting position open on a power plant construction project. Id. Hill International, Inc. submitted a proposal for the consulting position, which recommended its senior consultant, Richard LeFebvre, for the position. Id. The agreement between Wartsila and Hill contained an exculpatory clause. Id. Subsequent to LeFebvre beginning to work for Wartsila, Wartsila claims that Hill allegedly submitted false information in its proposal. Id. Consequently, Wartsila filed suit alleging claims of breach of contract, fraud, and negligence. Id. After the jury found in favor of Wartsila, the District Court held that the exculpatory clause in the contract was unenforceable and did not bar Wartsila from recovering damages. Id.

On appeal, the 3rd Circuit Appellate Court addressed the issue of whether exculpatory clauses operate to bar claims for pure breach of contract. Id. Under Maryland law, in the absence of legislation to the contrary, exculpatory clauses are generally valid and the public policy of freedom of contract is best served by enforcing the provision of the clause. Id. In addition, the court cites three exceptions that have been identified where the public interest will render an exculpatory clause unenforceable: (1) when the party protected by the clause intentionally causes harm or engages in acts of reckless, wanton, or gross negligence; (2) when the bargaining power of one party to the contract is so grossly unequal so as to put that party at the mercy of the other’s negligence; and (3) when the transaction involves the public interest. Id. The appellate court held that the exculpatory clause did not fall under any of the exceptions, and therefore, overruled the District Court’s ruling. Id.

Illinois courts have addressed issues regarding the enforceability of exculpatory clauses. Chicago Steel Rule and Die Fabricators Co. v. ADT Sec. Systems, Inc., 327 Ill. App. 3d 642, 645 (1st Dist. 2002). In Illinois, courts do not favor exculpatory clauses and strictly construe the clauses against the party it benefits. Id. For an exculpatory clause to be enforced it must have clear, explicit, and unequivocal language establishing that it was the intent of the parties. LaSalle Nat. Trust, N.A. v. Board of Directors of the 1100 Lake Shore Drive Condominium, 287 Ill. App. 3d 449, 455 (1st Dist. 1997). The question of whether an exculpatory clause will be enforced depends upon whether the defendant's conduct and risk of injury inherent in such conduct was of a type intended by the parties to fall within the scope of the clause. Masciola v. Chicago Metropolitan Ski Council, 257 Ill. App. 3d 313, 317 (1st Dist. 1993).

According to Illinois law, a party may create an exculpatory clause to avoid liability, absent fraud or willful and wanton negligence. Garrison v. Combined Fitness Centre, Ltd., 201 Ill. App. 3d 581, 584 (1st Dist. 1990). In addition, the clause will be valid and enforceable unless: (1) there is a substantial disparity in the bargaining position of the two parties; (2) to enforce the exculpatory clause would violate public policy; or (3) there is something in the social relationship between the two parties that would militate against upholding the clause. Id. Furthermore, an exculpatory clause does not violate public policy when (1) the parties to the contract have equal bargaining power; (2) it is invoked against a party to the contract in question; (3) the exculpatory clause is clear and unambiguous; (4) there is no evidence of fraud or duress; (5) there is no legislation to the contrary; (6) there is nothing in the relationship of the parties militating against enforcement; and (7) the damage at issue is to the other party to the contract. Chicago Steel Rule and Die Fabricators Co. v. ADT Sec. Systems, Inc., 327 Ill. App. 3d 642, 645 (1st Dist. 2002).

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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