Second Circuit: Parties' Blog Posts Did Not Create An Enforceable Joint Venture Agreement | Practical Law

Second Circuit: Parties' Blog Posts Did Not Create An Enforceable Joint Venture Agreement | Practical Law

The US Court of Appeals for the Second Circuit recently held in Turner v. Temptu Inc. that a blog post authored by three individuals did not create a binding joint venture agreement between those parties.

Second Circuit: Parties' Blog Posts Did Not Create An Enforceable Joint Venture Agreement

by Practical Law Commercial
Published on 29 Sep 2014 • USA (National/Federal)
The US Court of Appeals for the Second Circuit recently held in Turner v. Temptu Inc. that a blog post authored by three individuals did not create a binding joint venture agreement between those parties.
On September 23, 2014, the US Court of Appeals for the Second Circuit held in Turner v. Temptu Inc. that no reasonable jury could find that a blog created by three potential business partners created a binding joint venture agreement between those parties (No.13-3440-cv, (2d Cir. Sept. 23, 2014)).

Background

This case arises from a failed business relationship between Lois Turner, Michael Benjamin and Roger Braimon. These three parties were in negotiations to form a partnership to develop a home airbrush make-up system. Turner, Benjamin and Braimon communicated by e-mail and met numerous times to discuss forming this joint venture. In September 2006, the three also created a blog, which contained information about:
  • The ownership structure of the proposed company.
  • Each party's role and responsibilities.
  • The voting requirements for company decisions.
  • Buy-out options.
  • How profits would be shared if the company dissolved.
However, the blog left a number of terms "to be determined" and the parties never signed a formal, written agreement. After Turner and Braimon failed to raise investment capital, Benjamin (with the help of an outside investor), developed the airbrush system through his own company, Temptu Inc.
In 2011, Turner sued Benjamin and Temptu Inc. (Defendants) in the US District Court for the Southern District of New York for, among other things, breach of contract. Turner argued that the blog created a partnership agreement between the parties. The district court granted the Defendant's motion for summary judgment on the breach of contract claim, holding that no reasonable jury could find that the blog created an enforceable joint venture agreement. In particular, the district court held that no contract existed because:
  • The parties never agreed to all material terms of their agreement, such as how the parties would share losses, which is a required provision for an enforceable joint venture agreement.
  • The blog terms were never finalized and several were listed as "to be determined."
  • Benjamin did not sign the blog.

Outcome

The Second Circuit affirmed the district court's decision and similarly held that no reasonable jury could find that the blog created a binding contract between the parties. To determine whether the blog created a binding agreement, the court considered the objective manifestations of the parties' intent and their express words.
The court found that although the blog contained some possible contract terms, it did not form an enforceable agreement because:
  • It was an editable working document that was constantly changing and modifying.
  • Many of the terms were not finalized or were marked as "to be determined."
  • Turner admitted in a deposition that the parties never finalized their agreement.
Therefore, the parties did not manifest a mutual assent to contract.

Practical Implications

When contemplating a joint business relationship, parties should protect their interest by memorializing their relationship in a formal, written document. This case demonstrates that even if parties have a prior relationship and have been in negotiations for some time, a contractual business relationship may not exist between them absent a formal contract and the manifestation of a mutual assent to contract.
For more information on joint ventures, see: