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SA_FULL PACKET_2012-10-01
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SA_FULL PACKET_2012-10-01
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11/4/2013 9:02:48 AM
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10/1/2012 8:56:51 AM
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City Clerk
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Agenda Packet
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Community Development
Date
10/1/2012
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the terms of the contract." Accordingly, California law is generally predisposed to uphold <br />contracts as enforceable. 12 <br />For instance, in Ersa Grae Corp. v. Fluor Corp., (1991) 1 Cal.App.4th 613, 623, Division <br />1 of the Second District Court of Appeal (Los Angeles) found the terms of large scale real estate <br />development contract sufficiently definite to enforce where the contract stated one party, Ersa <br />Grae, agreed to provide funding within a defined period after the satisfaction of certain <br />conditions; the other, Fluor, agreed to select and pay for the services of all third-parties needed to <br />supervise and carry out the necessary construction work; and, upon completion, Fluor agreed to <br />transfer its interests in the completed project and underlying land lease to a consortium in <br />exchange for £1 million. 13 In rejecting Fluor's claim that the contract was unenforceable <br />because it contemplated the parties' negotiation and execution of future agreements necessary to <br />carry out their intent (e.g., the parties' required negotiation and execution of their contemplated <br />future agreement to convey the fully developed property subject to a long-term land lease), 14 <br />Ersa Grae explained: <br />The fact that an agreement contemplates subsequent <br />documentation does not invalidate the agreement if the parties <br />have agreed to its existing terms. (See Clark v. Fiedler (1941) 44 <br />Cal.App.2d 838, 847 ["`Any other rule would always permit a <br />party who has entered a contract like this ... to violate it, whenever <br />the understanding was that it should be reduced to another written <br />form, by simply suggesting other and additional terms and <br />conditions. If this were the rule the contract would never be <br />completed in cases where, by changes in the market, or other <br />events occurring subsequent to the written negotiations, it became <br />the interest of either party to adopt that course in order to escape or <br />evade obligations incurred in the ordinary course of commercial <br />business."']. See also, Smissaert v. Chiado (1958) 163 Cal.App.2d <br />827, 830.1s <br />The legally enforceable contract in Ersa Grae is very similar to the S.A. Venture <br />Agreement. Here, the Former Agency agreed to pay certain Fees in connection with certain <br />types o future development performed by the Developer at the Site. <br />Ersa Grae is just one of dozens of published cases holding contracts of this type fully <br />enforceable. See, e.g., Bleeeher v. Conte (1981) 29 Ca1.3d 345, 354-55 [the law does not bar <br />specific performance of a land sales contract in which a city's future approval of certain <br />development plans is made a condition precedent to completion of the agreement]; Larwin- <br />Southern California, Inc. v. JGB Investment Co. (1979) 101 Cal.App.3d 626, 638 [the mere <br />11 Judicial Council of California Advisory Committee on Civil Jury Instructions 302, Contract Formation - Essential <br />Factual Elements. <br />12 See, e.g., Patel v. Liebermensch (2008) 45 Cal.4th 344, 369-70 (quoting and citing Mclllmoil v. Frawley Motor <br />Co. (1923) 190 Cal. 546). <br />13 39 (1991) 1 Ca1.App.4th 613, 623. <br />14 Ersa Grae Corp., 1 Cal.App.4th at 623. <br />15 Id. at n. 3 (citations in original). <br />Page 7 of 9 <br />3-25
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