no particular meaning to their absence.
With respect to the absence of consideration as between plaintiff and defendant, we note that the June 28 letter was a necessary predicate to the closing held on that day, since no deal could be consumated without a letter of credit in place. Defendants were aware of this requirement, and, physically unable to issue such a letter of credit, provided the June 28 letter in its place. Upon receipt of and in reliance on that letter the closing -- from which defendant benefitted in various ways, the most easily described of which was payment in full by Refrigerated of all outstanding debts to defendant -- duly took place. We believe that these circumstances, and the fact that they arose in a commercial context, satisfies the requirement of consideration. See Trident General Insurance Co. Ltd. v. McNeice Bros. Pty. Ltd. (Ct. App. New South Wales 1987) 8 N.S.W.L.R. 270, 274.
Additionally, we cannot agree with defendant's contention that the presence of the phrase "or as mutually agreed upon" renders the entire June 28 letter so fatally indeterminate that it cannot be held to be a contract. That letter seems to us particularly immune to a challenge of ambiguity. It is a simple agreement to issue a letter of credit in "the draft form provided . . . or as mutually agreed upon." With respect to the choice of using "the draft form provided," the July 5 letter of credit ultimately issued is identical in all respects to the draft version, except the termination date and name of the issuing bank. Thus defendant cannot argue that the draft was in any way ambiguous.
As for the option of "as mutually agreed upon," Australian courts have ruled that the presence of a contract term modified by the phrase "or as mutually agreed" does not render a contract so uncertain as to be unenforeceable.
Nor does the prospect of further memorialization -- such as the issuance of the letter of credit reflecting the draft or terms mutually agreed upon -- undermine what is otherwise a contract.
After a contract is reached, parties can mutually agree to different terms,
or they can mutually agree to abandon the contract;
either way, the key is mutual agreement. And, as defendant points out, under Australian law the question of whether the parties intended to make a contract "must be determined objectively, with reference to the surrounding facts and circumstances as well as the working of the alleged contract." Def. Memo. in Opposition at 26 (citing Australian Broadcasting Corp. v. XIVth Commonwealth Games Ltd. (Ct. App., New South Wales, 1988) 18 N.S.W.L.R. 540, 549).
We find defendant's arguments that "form" does not mean "contents," and that plaintiff's silence constitutes mutual agreement to be without merit.
Finally, we do not agree that an issue of laches is raised. It is clear that everyone involved believed that the letter of credit was in place right up until plaintiff attempted to draw on it. Thus we cannot say that plaintiff did not act with "all due expedition" in seeking to rectify what it believed to be an error. Australasian Performing Right Assoc. Ltd. v. Austarama Television Pty. Ltd. (Sup. Ct. New South Wales 1972) 2 N.S.W.L.R. 467, 472. See Lindsay Petroleum Co. v. Hurd (1874) L.R. 5 P.C. 221, 239-40 (length of delay and what parties have done during the interval key factors to laches defense). Moreover, we can see no way in which defendant has been harmed by this mistake. Defendant continued to behave as if the letter of credit were in effect, taking into account the potential liability it represented in all of its credit decisions respecting Refrigerated. Defendant's letters of August 1987 and September 1988 show that its failure to collect fees for the letter of credit was due to its own accounting errors and not the result of its halting such collection because it considered the letter of credit terminated. And, as we determined supra note 10, there would have been no need to procure a new indemnification agreement because it runs with the letter of credit. Thus it is difficult to see what other steps defendant might have taken to protect itself.
We conclude as a matter of law that the June 28 letter is indeed a contract. There being no evidence of any mutual agreement by the parties to change the form of the draft letter of credit provided by plaintiff, the actual letter of credit instead mirroring the draft in every way except the termination date, we further conclude that the letter of credit must be reformed to reflect the termination date upon which the parties had originally agreed. Plaintiff shall submit on ten days notice a judgment reflecting our decision and including a reformed letter of credit.
New York, New York
April 21, 1992
WHITMAN KNAPP, U.S.D.J.