The First Department, in a full-fledged opinion by Justice Manzanet-Daniels, determined the “doctrine of definiteness” should not be applied to an agreement in which the specific dollar-amount of a fee for financial advisory services, called a transaction fee, was not spelled out. The contract stated only that the transaction fee would be “consistent with investment banking industry practice for transactions of comparable complexity, level of analysis and size.” Because the fee was ultimately determined by a method accepted in the investment banking industry, the fee was not rendered unenforceable by the “doctrine of definiteness:”
The doctrine of definiteness “assures that courts will not impose contractual obligations when the parties did not intend to conclude a binding agreement” … . It is to be sparingly used, as a “last resort,” and only when an agreement “cannot be rendered reasonably certain by reference to an extrinsic standard that makes its meaning clear” … . The Court of Appeals has cautioned that if applied with too “heavy [a] hand,” the doctrine may negate the reasonable expectations of the parties in entering into the contract … .
The “Transaction Fee” provision explicitly references the type of “commercial practice, or trade usage” New York courts routinely rely upon to render a price term sufficiently definite … . The fee [is] enforceable inasmuch as it may be ascertained from public price indices and industry practice … .
Where, as here, the record demonstrates that sophisticated parties intended to be bound by an agreement, the doctrine of definiteness should not be used to defeat the bargain of the parties … . Cowen & Co., LLC v Fiserv, Inc., 2016 NY Slip Op 03840, 1st Dept 5-17-16
CONTRACT LAW (DOCTRINE OF DEFINITENESS WAS PROPERLY NOT APPLIED, DOLLAR-AMOUNT OF THE FEE AT ISSUE COULD BE DETERMINED BY INDUSTRY PRACTICE)/DOCTRINE OF DEFINITENESS (CONTRACT LAW, DOCTRINE OF DEFINITENESS WAS PROPERLY NOT APPLIED, DOLLAR-AMOUNT OF THE FEE AT ISSUE COULD BE DETERMINED BY INDUSTRY PRACTICE)