Keitel v E*TRADE Fin. Corp., 2017 NY Slip Op 06624, (September 26, 2017 App. Div. 1st Dept.)

Keitel v E*TRADE Fin. Corp., 2017 NY Slip Op 06624, (September 26, 2017 App. Div. 1st Dept.)

By:  Marc Jacobson

The Oscar and Golden Globe nominee, and Co-President of The Actor’s Studio, Harvey Keitel sought to enforce an offer made to him to appear in what seems to be a commercial for E*Trade.   Although Keitel’s agent required that whatever offer was submitted to them for Mr. Keitel’s services had to be “firm and binding,” the Defendant’s offer, which had additional conditions attached to it, was held to be not “firm and binding” so therefore no agreement was reached and judgement for the defendant/respondent was affirmed.

The agent requested that any offer made for his services be “firm and binding.”  Defendant acknowledged this request to the agent.  Internal communications on the defendant’s side showed defendant intended to make a “firm offer.”  Defendant’s cover email stated the offer was “firm and binding,” but that email also stated the offer was contingent on the parties agreeing to compensation as well as the script.

The term sheet attached to that email, stated that the term sheet “sets forth the general intent of the parties to discuss in good faith the terms and conditions” of the deal and that “neither party shall be bound until the parties execute a more formal written agreement.”

The Appellate Division affirmed Justice Ramos’ decision in the lower court that no agreement was formed, because the term sheet by its very terms suggested that the term sheet was not binding without execution of a formal written agreement.  The court determined that Mr. Keitel’s reliance on the email, while effectively ignoring the term sheet itself, was not reasonable.  No binding agreement existed, so the court affirmed the decision below.

The court refused to consider evidence with respect to defendant’s offer to pay a common “kill fee” after the dispute arose, because, such a payment was in the nature of a settlement offer, and is not admissible.

For me, the process is analogous to the “battle of the forms” embodied in Article 2 of the Uniform Commercial Code, governing the sale of goods.  UCC Section 2-207 states:

  1. A definite and seasonable expression of acceptance … sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
  2. The additional terms are to be construed as proposals for addition to the contract.  Between merchants such terms become part of the contract unless:
    (a) the offer expressly limits acceptance to the terms of the offer;
    (b) they materially alter it;  or
    (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
  3. Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract.  In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.

Practitioners should recognize that emails, accompanied by term sheets may create confusion with regard to the parties’ intention. But it is good to know that at least in the First Department, the words of a term sheet are more important (dare I say trump?) an email.

Marc Jacobson
marc@marcjacobson.com