fees as a consultant to Isomed during the same period. The
payment of consulting fees was clearly not partial liquidation
of Isomed's indebtedness to Joseph.
Walter also accounted for $56,470.72 amounting to payment by
defendant of the principal and interest due on the $50,000 loan
from Joseph to defendant on August 1, 1986.
Finally, he accounted for $33,708.23 in interest payments on
the letter of credit while it was outstanding.
Defendants have presented no credible evidence to warrant
rejection of this testimony. Accordingly, the court finds that
payment of $155,178.95 by Isomed to the Roths as indicated in
Walter's testimony was for valid and legitimate obligations
owed Walter for consulting services performed by him pursuant
to agreement and to Joseph in liquidation of defendant's
indebtedness to him. Defendant claims $158,352.99 in its
counterclaims. Walter has accounted for $155,178.95. Defendant
has presented no testimony of any payments in addition to those
itemized in Walter's testimony and the court concludes that
Walter's testimony has detailed all the of the outstanding
funds involved. Accordingly, the counterclaims are dismissed.
Defendant contends that the June 23, 1988 agreement lacked
consideration. It argues that Joseph, in extending the letter
of credit, was doing no more than he was required to do under
the September 30, 1984 agreement which was to continue
providing the standby letter in the amount of $200,000 and to
receive interest thereon at the rate of 7 1/2% per annum.
As the defendant correctly points out, consideration is a
necessary ingredient for an enforceable contract.
Consideration, which can take the form of either promise or
performance, can be either a bargained for gain or advantage to
the promisee or a bargained for legal detriment or disadvantage
to the promisor. Holt v. Feigenbaum, 52 N.Y.2d 291, 299-300,
437 N.Y.S.2d 654, 658-659, 419 N.E.2d 332, 336-337 (1981). If
it is a forbearance, it must generally be to refrain from doing
that which a party has a legal right to do. If it is an act, it
must generally be something that a party is not otherwise
legally required to perform. It is a basic principle that the
promise to perform or actual performance of a pre-existing duty
is not adequate consideration. James A. Haggerty Lumber & Mill
Work, Inc. v. Thompson Starrett Constr. Co., 22 A.D.2d 509,
510, 256 N.Y.S.2d 1011, 1012 (1965).
Plaintiff did not have a pre-existing duty to continue to
provide the standby letter of credit. He could have decided to
refuse to continue to provide the standby letter of credit and
take his losses, but in doing so he would have thereby deprived
defendant of a benefit. Joseph's agreement to continue to
provide the standby letter of credit beyond the date he had
expressed his desire to be freed from this standby obligation
and the extension of the letter of credit to June 30, 1989, on
July 12, 1988, was sufficient consideration to validate the
June 23rd agreement.
Defendant suggests that the June 23rd agreement was merely an
agreement to agree, lacking agreement as to certain material
terms, and is therefore unenforceable. Certainly "it is well
settled that a mere agreement to agree, in which a material
term is left for future negotiations, is unenforceable."
Bernstein v. Felske, 143 A.D.2d 863, 865, 533 N.Y.S.2d 538, 540
(2d Dept. 1988). This, however, only applies to material terms.
Non-material terms may be left to future agreement without
jeopardizing the binding effect of the contract. Four Seasons
Hotels, Ltd. v. Vinnik, 127 A.D.2d 310, 317, 515 N.Y.S.2d 1, 6
(1st Dept. 1987).
Under these standards, the June 23rd undertaking is an
enforceable contract because all the essential terms of the
agreement are contained in the June 23rd document. Joseph was
to extend the standby letter of credit to June 30, 1989, and in
fact did so on July 12, 1988. Isomed was to deliver to him
immediately 350,000 shares of Lansco Resources, Ltd. stock in
saleable form pursuant to Joseph's instructions. The schedule
for the payment of outstanding interest indebtedness was set
Isomed was to have thirty days to secure a substitute letter of
credit. In the event of success, Joseph was required to make a
pro rata return of the Lansco shares. It is clear that the
document in question is much more specific than contracts which
are struck down for lack of agreement on material terms.
See, e.g., Yan's Video, Inc. v. Hong Kong TV Video Programs,
Inc., 133 A.D.2d 575, 578, 520 N.Y.S.2d 143, 145 (1st Dept.
1987) (agreement to negotiate in good faith to renew agreement
upon terms and conditions to be negotiated is nothing more than
an agreement to agree and is not enforceable).
The parties have stipulated that the value of the publicly
tradeable shares of Lansco Resources, Ltd. was $0.70 Cd. (70
cents Canadian) on July 12, 1988.
Plaintiff is entitled to damages of $245,000 Cd. for breach
of the June 23rd agreement regarding delivery of the stock. The
parties agree that the proper conversion rate for July 12,
1988, is $1 Cd. equals $.82644 U.S. At this rate, plaintiff's
damages for breach of the June 23rd agreement amount to
As of June 30, 1988, Joseph was owed $53,500 in interest on
the standby letter of credit. In addition, defendant owes
interest on the letter of credit at 7 1/2% for the period June
30, 1988 to June 30, 1989. These two amounts total $68,500.
Walter testified that $31,208.33 in interest payments on the
letter of credit were made subsequent to the June 23, 1988
agreement, and thus the outstanding unpaid interest on the
letter of credit is $37,291.67.
In sum, plaintiff is awarded $202,477.80 for breach of
contract and is entitled to interest at nine percent (9%) from
July 12, 1988, plus $37,291.67 in unpaid interest due on the
letter of credit.
IT IS SO ORDERED.
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