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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
Doc Type
Agenda Packet
Agency
Community Development
Date
10/1/2012
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presence of a satisfaction clause in a contract does not result in that contract's nullity]; Mattei v, <br />Hopper (1958) 51 Cal.2d 119 [land sale contracts containing satisfaction clauses are generally <br />enforceable, except where such clauses render a party's obligation to perform illusory]. Here, <br />DOF does not advance the unsustainable claim that anything in the S.A. Venture Agreement <br />renders either party's duty to perform illusory. <br />Black letter law further holds that "[a] contract's material terms (such as subject matter, <br />price, payment terms, and duration) must be `sufficiently definite' so that each party can be <br />`reasonably certain' about what it is promising to do or how it is to perform." 16 Here, the subject <br />matter of the S.A. Venture Agreement is unambiguous and includes a detailed description of the <br />Former Agency's obligations to the Developer with respect to payment of the Fees and <br />repayment of the Fee Loan. 17 The dollar amount of the Former Agency's payment obligation is <br />ascertainable through the formula set forth in Section 6 of Attachment No. 4 of the Participation <br />Agreement, as amended by the Third Amendment. That same provision sets forth a clear <br />formula for the principal amount of the Fee Loan, as well as the interest rate, the source of <br />payments, and a pledge of site specific tax increment securing repayment of the Fee Loan. The <br />Former Agency's (and now the Successor Agency's) future obligations under the S.A. Venture <br />Agreement are therefore sufficiently defined in the agreement to enable the parties to perform <br />their obligations. <br />Finally, the DOF's May 24 Letter ignores the difference between the parties' execution of <br />documents needed to carry out pre-existing contractual commitments and the negotiation of <br />entirely new agreements. An "agreement to agree" - i.e., an agreement to negotiate and sign <br />future agreements or legal documents required to effectuate the purpose and intent of a pre- <br />existing contractual obligation - is fully enforceable in California. Copeland v. Baskin Robbins <br />U.S.A. (2002) 96 Cal.AppAth 1251, 1260 ["[W]hen the parties are under a contractual <br />compulsion to negotiate ... the covenant of good faith and fair dealing attach[es], as it does in <br />every contract. In the latter situation the implied covenant of good faith and fair dealing has the <br />salutary effect of creating a disincentive for acting in bad faith in contract negotiations."] Hence, <br />DOF's suggestion that there is no enforceable duty to negotiate the terms of legal documents <br />needed to carry out the parties' otherwise clearly stated deal in good faith is simply contrary to <br />law. <br />Even if "detail" terms are omitted, contracts are enforceable under California law. <br />California courts have specifically enforced agreements that have not expressly contained all of <br />the terms agreed upon. For instance, in Goodwest Rubber Corp, v. Munoz (1985) 170 <br />Cal.App.3d 919, 921, reversing a judgment denying specific performance when the contract <br />called for payment at "market value," the court stated: <br />The modern trend of the law is to favor the enforcement of <br />contracts, to lean against their unenforceability because of <br />uncertainty, and to carry out the intentions of the parties if this can <br />feasibly be done. Neither law nor equity requires that every term <br />and condition of an agreement be set forth in the contract. <br />16 Dyer v. Bilaal (D.C. 2009) 983 A.2d 349, 356. <br />17 See Section 6 of Attachment No. 4 of the Participation Agreement, as amended by the Third Amendment. <br />Page 8 of 9 <br />3-26
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