Disagreement About An Agreement To Agree

PE Systems made a pitch to CPI Corp., offering to reduce the latter's credit card processing costs. The parties signed a document 'that appeared to be a contract', but CPI later repudiated it and argued that it was but an agreement to agree, and thus not enforceable. The deal appeared to have been that PES would calculate CPI's historic processing costs as a starting point, but that the parties would agree on a specific number on which to base comparisons for calculating future cost savings. An addendum defining 'historic cost' was left blank.

The trial judge found in favour of PES, but was reversed on appeal. The case then went to Washington's highest state court, which applied a test of 'objective manifestation' to determine whether there was a binding agreement between the parties. Under that test, it was clear that the parties had entered into a contract, albeit one with 'an open term easily and definitively ascertainable and therefore enforceable'. No further