You Must Agree on Essential Terms to Make a Contract Enforceable

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Contract Attorney

In a recent unpublished N.J. Appellate Division decision, we attorneys got a look into just what it means to have an enforceable contract.  In Jacowitz v. Lozito, the plaintiff doctor entered into a verbal agreement with a defendants’ chiropractic practice where the plaintiff, a cardiologist, would provide the defendants’ out of network patients with imaging scans, and the defendants would handle the billing and pay the technician.  The defendant was not billing properly, so the money that should have been paid to the plaintiff was not getting to the plaintiff’s bank account.  The plaintiff and defendant tried to work out the incorrect payments, with the plaintiff even receiving a partial payment from the defendant.  The parties then entered into a written contract where plaintiff would pay the technician directly for every patient the defendants referred to him.  This did not fix the problem(s), and so the plaintiff sued, claiming a breach of contract.

The defendants argued that because the benefits were prospective, and the agreement would take effect in the future, no valid contract existed.  The court started its analysis by talking about contract terms called “offer and acceptance”.  It noted that while a contract exists only when each party can (with reasonable certainty) know what each has bargained to do, a contract can exist if the parties agree to essential terms and they show an intention to bind themselves to their agreement.  After reviewing the evidence, the court found that the plaintiff and the defendant entered into an agreement where plaintiff would provide services for defendants’ patients in exchange for compensation created by the defendant that would be determined at a later time.  The defendant testified that the plaintiff performed his duties under the contract, and acknowledged that plaintiff’s services warranted compensation by providing checks to the plaintiff indicating they were partial payments.  There was a mutual understanding between the parties, and so it didn’t matter that the benefits (payment) were to be made at a later date.  Defendant understood that payments needed to be made, and their failure to make their payments was deemed a breach of contract.

Interestingly, there was no analysis by the court on the issue of whether the contract should be enforced based upon the later written contract or when the original oral contract was created.  Courts have been reluctant to enforce contracts when made orally if they are for a significant amount of money.  They often disregard verbal promises as gratuitous because the parties don’t confirm the “statute of frauds,” meaning they weren’t in writing.  Thus, this contract, which was written down after being breached so many times, had a risk of not being enforced prior to the time it was written.  But no discussion is made of that.  Instead, the biggest issue in the case was whether there was a meeting of the minds.  The court’s analysis is sound because even if a benefit was to be provided in the future, a doctor (or any vendor or contract participant) who provides a service for another doctor should be compensated if there was an agreement for compensation.

To discuss your NJ Contract matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.