In the recent Delaware Court of Chancery decision of James J. Gory Mechanical Contracting, Inc. v. BPG Residential Partners V, LLC and the Buccini/Pollin Group, Inc., Del. Ch. C.A. No. 6999-VCG (Del. 30, 2011), the Court examined the fundamental contract tenets of offer, acceptance, and consideration in denying Defendants’ Motion to Dismiss the Complaint.
Plaintiff, a construction company, brought suit against Defendants for breach of a construction contract. Plaintiff’s complaint alleged that Defendants owed in excess of $290,000 to Plaintiff. Through their Motion to Dismiss, Defendants alleged that Plaintiff’s acceptance of a payment memorandum, subsequent to the execution of the construction contract at issue, constituted a superseding agreement that made any payment obligation of the Defendants contingent upon the sale of a “minimum number of condominiums”.
The Court stated that “[i]t is the blackest of black-letter law that an enforceable contract requires an offer, acceptance, and consideration.” The Court held that the alleged superseding contract was unenforceable as no consideration was given by the superseding contract, given that a promise to fulfill a pre-existing duty cannot be deemed consideration. Further, the Court held that the terms were ambiguous as it failed to indicate the quantity of condominium units that would need to be sold in order for payments to resume to Plaintiff.
Finally, the Court stated that Plaintiff’s signing of the payment memorandum did not constitute a waiver of its rights to collect under the original contract. To this effect, the Court held:
“[W]aivers of contractual rights are not lightly found. Under Delaware law, a waiver is ‘the voluntary and intentional relinquishment of a known right . . . and implies knowledge of all material facts, and intent to waive.’” A waiver “must be unequivocal.”
The Court found that the payment memorandum was an insufficiently unequivocal relinquishment of Plaintiff’s intent to waive its right to payment, and therefore, the Court denied Defendants’ Motion to Dismiss the Complaint.