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Keywords

contractsettlementattorneyappealtrialwillcontractual obligation

contractsettlementplaintiffdefendantappealtrialwill

Related Cases

Mandel v. Liebman, 303 N.Y. 88, 100 N.E.2d 149

Facts

Louis Mandel, an attorney, entered into a contract with Max Liebman, an author and director, on May 8, 1946, to act as his personal representative and manager for five years, receiving 10% of Liebman's earnings. Disputes arose regarding the return of business papers and the payment of commissions, leading to a turnover proceeding and a subsequent settlement agreement in 1947. Mandel later sought compensation for the period from May 8, 1948, to May 8, 1949, under the original contract, which was dismissed by the trial court on the grounds that the contract created an attorney-client relationship.

Shortly thereafter, a dispute arose between the parties as to the possession of specified business papers of defendant which plaintiff refused to return to defendant, despite demand therefor, because of defendant's failure to pay the percentage of earnings agreed upon in the contract of May 8, 1946.

Issue

Was the contract between Louis Mandel and Max Liebman unconscionable and void, and did it create an attorney-client relationship that allowed for dismissal without cause?

The majority in the Appellate Division went behind the settlement agreement of November 11, 1947, and held that the original contract of May 8, 1946, as modified by the settlement agreement, ‘was void and unconscionable and against public policy’.

Rule

Contracts are generally enforceable unless they are unconscionable, meaning the obligations are shockingly disproportionate and cannot be enforced. Courts will not inquire into the adequacy of consideration unless the contract is grossly unreasonable.

It is commonplace, of course, that adult persons, suffering from no disabilities, have complete freedom of contract and that the courts will not inquire into the adequacy of the consideration.

Analysis

The Court of Appeals found that the Appellate Division's conclusion of unconscionability was not supported by the terms of the contract, which implied that Mandel was required to provide services as Liebman's manager. The court emphasized that the contract's provisions did not absolve Mandel of his obligations while still allowing him to receive compensation based on a percentage of Liebman's earnings. The court noted that the contract was similar to those commonly used in the entertainment industry, further supporting its validity.

Since plaintiff, as we hold, was required to render some service to defendant under the contract, it cannot be said that the contract was unconscionable.

Conclusion

The Court of Appeals reversed the lower court's decision and granted a new trial, stating that the original contract was not unconscionable and that the issues surrounding the contractual obligations needed further examination.

The judgments below should be reversed and a new trial granted, with costs to abide the event.

Who won?

Louis Mandel prevailed in the appeal, as the Court of Appeals found that the contract was valid and required a new trial to address the issues raised.

The Court of Appeals, Conway, J., held, inter alia, that the contract was not unconscionable and void.

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