• August 14, 2012

A property owner, a restaurant operator, and a financier entered into a three-party “contract” pursuant to which property owner was to supply property, restaurant operator proposed to operate a restaurant, and the financier was to provide the start-up money.

Makes perfect sense, right?  But what, exactly is “start-up money”?

Plaintiff Scott Barriball and others went all the way to trial before Hennepin County District Court Judge Joseph R. Klein for the $12,000 that he felt that the financier, Larry Langer, stiffed him on this three-party deal.

Judge Klein concluded, however, that the “contract” was too vague, failed to set out material terms, and therefore failed to meet the basic prerequisites of a contract and he found it was therefore unenforceable.  On the other hand, Judge Klein found for the Plaintiff Barraball on a theory of promissory estoppel, so what Barriball could not get via one theory of recovery, he could get through another.  Or so it seemed.

The Minnesota Court of Appeals held that the transaction that Barraball sought to enforce was not only too vague and uncertain to support a contract claim but also that the same problem doomed recovery through promissory estoppel.

1) How much would it have cost Barriball to get a lawyer involved in the front end to draft the initial document in such a way as to make sure it was an enforceable contract? (Maybe the three “principals” could have split the bill three ways?)

2) How much did Plaintiff Barriball (and other plaintiffs) pay trial counsel in their unsuccessful effort to get paid $12,000?  (Did they double or triple their losses? Maybe their lawyer took the matter as a favor, pro bono, or on a contingent fee???)

3)  In hindsight, with question Nos. 1 and 2 in mind, what should Barriball have done differently?  Was the error failing to devise a robust contract on the front end? Or was it bothering to sue for $12,000 on the back end?  Or were both decisions completely rational and reasonable and Barriball just took some risks on both ends that failed to pay out?

And, finally, what is the minimum amount of money at stake that makes civil litigation, on its face, a losing proposition?

These questions will never be definitively answerable.  But there is a good lesson or two for small Minnesota businesses there.

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