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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.

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.

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.

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.

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.

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.

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.

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.

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.

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.