Tag Archives: binding contract

AN “AGREEMENT TO AGREE” IS NOT A BINDING CONTRACT

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A driving issue in a recent dispute was whether a binding contract existed simply through the selection of a proposal in response to a solicitation. Or, was there nothing more than an “agreement to agree,” which does not create a binding contract. There is an important distinction between a binding contract an an “agreement to agree.”

A Community Redevelopment Agency (CRA) issued a Request for Proposals otherwise referred to as an RFP. The RFP specifically stated that the CRA and proposer will be contractually bound only if and when a written contract is executed between the parties. A proposer was notified that it was selected as the winning proposer however a written contract was never executed because the proposer was subsequently disqualified. The proposer filed a lawsuit claiming it was wrongfully disqualified and prevailed. The trial court found it was entitled to attorney’s fees pursuant to a contract that had been formed when the proposer’s proposal was originally accepted.

But was a contract actually formed? The appellate court said “NO!” holding that there was no binding contract simply because the proposer’s proposal was accepted. There was nothing more than an “agreement to agree” which never turned into a binding contract:

“The question of whether the parties intended to form a binding contract is determined by examining the language of the document in question and the surrounding circumstances.”  “[I]f the parties prescribe terms to effectuate a binding agreement, such terms are controlling.”  Thus, case law is clear that “[w]here the parties intend that there will be no binding contract until the negotiations are reduced to a formal writing, there is no contract until that time.” 

The RFP specifically stated that “[t]he CRA and Proposer will be contractually bound only if and when a written contract between the parties is executed by the appropriately authorized officials of the CRA and Proposer.” Based on the plain language of the RFP, neither party was bound, nor was there a binding contract, until a written agreement was executed.  Therefore, we find the trial court erred in awarding attorney’s fees based on a contract that was not written or agreed to. Because the parties intended to be bound only when the negotiations were reduced to a formal writing, and a formal writing was never executed, there was no contractual basis to support an award of fees ….Rather, the CRA’s selection of [the proposer] was “nothing more than an ‘agreement to agree,’ ” which is not enforceable. 

The CRA’s selection of [the proposer] did not create a contract between the parties. “A request for proposal is used, for example, when the municipality is unable to define the scope of work required completely, or when responses may require subsequent negotiation. As a result, a contract is not typically formed until after the negotiation process.” 

Community Redevelopment Agency of the City of West Palm Beach v. Vita Lounge, LLC, 50 Fla.L.Weekly D2448a (Fla. 4th DCA 2025) (internal citations omitted).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

UNJUST ENRICHMENT CLAIMS WHEN THERE IS NO BINDING CONTRACT

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A recent appellate opinion starts off, “This is a typical South Florida construction dispute.”  (See case citation at the bottom) Let’s see, is it?  No. It’s a garden variety payment dispute where the parties did NOT have a binding contract.  Why? That’s for a different day (because the smart practice is ALWAYS to have a contract!) but it touches on the equitable, unjust enrichment claim. And it touches on competing unjust enrichment claims and the apportionment of those claims. In other words, can both parties be right on their unjust enrichment claims?

An owner hired a general contractor for home renovations. Work started but the relationship soured and the general contractor did not complete the work. The general contractor filed a payment dispute against the owner based on unpaid invoices.  It pled alternative theories of recovery against the owner: breach of contract and unjust enrichment. The owner filed a counterclaim against the general contractor for the same claims. During the non-jury trial, the general contractor presented unpaid invoices along with testimony that the invoices represented the value of services rendered. The owner presented evidence of the completion of work damages.

The trial court found that the parties did NOT have a binding contract. Thus, there was no breach of contract. The trial court found that the parties both satisfied the elements for unjust enrichment claims against one another, but a net judgment was rendered in favor of the general contractor based on the general contractor’s unpaid invoices minus the damages the owner satisfactorily proved.

The owner appealed claiming the trial court “was required to employ an all-or-nothing approach in adjudicating the competing unjust enrichment claims.”   The appellate court disagreed:

This court has held that damages in such [unjust enrichment] cases must not be speculative or the product of conjecture.  They may, however, “be valued based on either (1) the market value of the services; or (2) the value of the services to the party unjustly enriched.” 

Against these principles, we examine the instant case. Here, [the general contractor] produced the unpaid invoices and established the amount billed represented a reasonable value of the services performed. Further, while the court rejected evidence in arriving at its determination of damages, “[c]ompetent, substantial evidence is tantamount to legally sufficient evidence, and a reviewing court must assess the record evidence for its sufficiency only, not its weight.” 

To the extent that [the owner] contend damages must be awarded on an all-or-nothing basis, we agree with the proposition that contractual damages are not ordinarily subject to apportionment.  However, we can find no authoritative source extending this general rule to the doctrine of unjust enrichment. Instead, the opposite holds true. The availability of a remedy in unjust enrichment is qualified to avoid unfair hardship. Consistent with this premise, principles of restitution, rather than contract, guide any award of damages. 

The Restatement (Third) of Restitution and Unjust Enrichment provides that the measure of “the unjust enrichment of a conscious wrongdoer . . . is the net profit attributable to the underlying wrong.”  The object is, the Restatement explains, “to eliminate profit from wrongdoing while avoiding, so far as possible, the imposition of a penalty.” 

Although this case does not involve profits in the traditional sense, it is analogous. To protect against a windfall, the trial judge credited [the owner] for the damages they established they sustained during construction. This methodology is consistent with the principles embodied in the Restatement and the underpinnings of unjust enrichment law. Accordingly, we discern no error and affirm the judgment under review.

Dooley v. Gary the Carpenter Construction, Inc., 48 Fla.L.Weekly D2143a (Fla. 3d DCA 2023) (internal citations omitted).

There are some interesting takeaways from this case.

First, testimony that the unpaid invoices represented the value of services performed is important. Here, the unpaid invoices coupled with the testimony was competent, sufficient evidence to support an unjust enrichment claim.

Second, unjust enrichment claims can be apportioned. Thus, both parties perhaps may be right to come up with an equitable approach that gets netted out in a final judgment.

Third, have a contract.  A negotiated, agreed-upon contract with terms and conditions. If you have a binding contract then unjust enrichment does not and should not come into play.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.