A Michigan Circuit Court upheld a contract for $121,485.35 despite the fact that price was not included anywhere in the contract. In J&N Koets, Inc. v. Onemarket Properties Lake Point, Inc. (Kent County Circuit Court), the Defendant condominium complex hired plaintiff during a flooding emergency. Defendant’s manager signed an “Emergency Work Authorization and Direct Payment Request Form” that authorized Defendant to begin work and stated that it would later bill the client. Nowhere in the form was a price for the work given or even a price quote. Instead, the Plaintiff later sent a bill for $121,485.35 which the Defendant failed to pay.
The Circuit Court ruled in favor of the Plaintiff noting that “[i]n both published and unpublished decisions, our Court of Appeals has ruled that a missing price term in a contract can be filled in with ‘a reasonable price.’” In addition, the Circuit Court stated that “the claim for breach not only demands the full amount of the invoice, i.e., $121,485.35, but also payment of a service charge of two percent per month as contemplated by the language of the work-authorization agreement.” This service charge was significant since the contract was signed back in 2007.
In addition, the Circuit Court granted summary judgment to the defendant manager in her individual capacity. The Plaintiff included the condominium’s manager as a defendant because she had signed the work authorization agreement. However, the manager had signed the work authorization as manager of the condominium and not as an individual. The Court noted that “As a general rule, ‘an individual stockholder or officer is not liable for his corporation’s engagements unless he signs individually, and where individual responsibility is demanded the nearly universal practice is that the officer signs twice – once as an officer and again as an individual.’” Since, the defendant manager signed the work authorization agreement in her capacity as manager, she was not individually liable on the contract.
In order to avoid getting surprised with a large bill like the defendant in the case described above, a customer/buyer should set a price term in the contract. Even if the exact price is unknown, a reasonable estimate might prevent the other party from claiming an amount grossly in excess of what the customer had imagined.
If you have any questions, please contact the attorneys at Demorest Law Firm, PLLC.
