Indefinite Agreements

Case: Varney v. Ditmars (1916) p. 400-405 [NY Court of Appeals]

Parties: Plaintiff - Varney (employee)

Defendant - Ditmars (employer)

Procedural History: Employee's complaint was dismissed. Plaintiff appealed.

Facts:
• Oct 10, 1910 - Varney applied for employment with Ditmars, and said he would
start working for $40/week. He was then employed at $34/week. A short time later,
Varney informed Ditmars that ha had another job offer, and Ditmars told him that
if he stayed and helped him with some projects, he would offer him a better
future.
• Feb 1, 1911 - Ditmars (def) said: "I am going to give you $5 more a week; if you
boys will go on and continue the way you have been and get me out of this trouble
and get these jobs started that were in the office three years, on the 1st of next
January I will close my books and give you a fair share of my profits." Varney
worked overtime, many Sundays and Holidays, and got a lot of the work done. From
then on, Varney was paid $40/week.
• Nov 6, 1911 (night before general election) - Ditmars asked Varney and all
employees to work the next day (Election Day). Varney told Ditmars he wanted to
stay home for the elections.
• Nov 7, 1911 (4pm) - Varney stayed home for the election and later in the day
became ill and stayed home for a few weeks as he recovered
• Nov 11, 1911 - Ditmars sent Varney a letter terminating his employment because
Varney stayed home election Day after Ditmars had asked him to work.
• Once Varney felt better, he went to Ditmars telling him he was available to
work, and that there was an agreement, but Ditmars said no agreement.
• Varney brought suit to recover: for services during Nov 7-Dec 31, 1911 (he was
sick beginning Nov 7) at a rate of $40/week. And for a fair and reasonable profit
of the period from Feb 1, 1911 - Jan 1, 1912.

Issue: Whether there was an enforceable promise when Ditmars said he would hive
Varney a "fair" share of the profits.

Holding: Complaint dismissal Affirmed.

Reasoning: The words fair and reasonable have a definite and enforceable
meanings when used in business transactions dependent upon the intentions of the
parties in use of such words. The statement promising a fair share of profits
made by the Defendant is vague, indefinite and uncertain and the amount can not be
computed from anything said by either party. The contract was never consummated
and was left subject to the will of the Defendant for further negotiation. The
court held that the employee was entitled to recover only the difference between
the amount he was paid and the actual value of his work, if the value was above
the amount paid, for work actually performed.

Dissent: (Cardozo) It is not true that a promise to pay an employee a fair share
of the profits in addition to his salary is always and of necessity too vague to
be enforced. The promise must appear to have been made with contractual intent.
If that intent is present, it cannot be said from the mere form of the promise
that the estimate of the reward is impossible. The evidence would permit the jury
to find that the Plaintiff was discharged without cause and he is entitled to
damages measured by his salary for the unexpired term.

RULE: For the validity of the contract, the promise, or the agreement, of the
parties to it must be certain and explicit and that their full intention may be
ascertained to a reasonable degree of certainty. Their agreement must be neither
vague nor indefinite, and, if thus defective, parol proof cannot be resorted to.
However, this does not bar recovery based on quantum meruit (reasonable value of
services), but only for work actually performed in reliance of the indefinite
promise.