Law for Business 10th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 6

In June Farago Advertising started work on an ad project for Hollinger under an oral agreement. The only term was for monthly payment for work performed. Farago argued that ad contracts customarily included a 90-day termination clause because an agency needs to discharge or reassign staff for a new client. As Farago worked on the campaign, it negotiated about a written contract, and a central issue of the negotiations was a notice-of-termination clause. In October Farago's attorney proposed a 60-day termination notice to Hollinger's attorney. The next day Farago e-mailed Hollinger that the proposed language be inserted into the written contract, and that copies be sent out for signatures. Hollinger did so, and sent the master document back unsigned along with a note that said, "Please have your client execute both copies... and return them to me in the enclosed pre-addressed, post-paid Federal Express envelope. I will then have them signed, and return one" to you. Farago signed the contract and returned it to Hollinger, who never signed it. Soon thereafter Hollinger paid Farago for the work done from June to October and paid $84,000 for two additional months. In December Hollinger notified Farago that it would not be executing the agreement letter. Farago sued for $84,000 for two months' termination pay plus fees and expenses. Was there an effective acceptance? Explain.