41 N.Y.2d 397 (1977)
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A contract can be formed through the objective manifestations of intent, as evidenced by the parties’ conduct and communications, even in the absence of a formal written agreement.
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Summary
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This case addresses whether the actions and communications between an electrical subcontractor (Brown) and a property owner/builder (Cale) created a new, legally binding agreement after the original general contractor (Beam) defaulted. The New York Court of Appeals affirmed the lower courts’ rulings that Cale’s conduct and communications indicated an intent to contract directly with Brown, obligating Cale to pay Brown for the completed electrical work. The court emphasized that a contract’s existence depends on the parties’ objective intent as demonstrated by their words and actions, not their subjective intent.
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Facts
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Cale owned and was building a shopping plaza, hiring Beam as the general contractor for a portion of the project. Beam subcontracted with Brown for the electrical work. Beam fell behind on payments to Brown despite receiving timely payments from Cale. Brown threatened to breach the contract with Beam due to non-payment. Beam eventually abandoned the job due to financial distress. Before Beam left, Brown and Cale discussed securing payment for Brown. With Cale’s knowledge and consent, Brown continued and completed the electrical work after Beam’s departure. Brown then invoiced Cale directly for the outstanding balance. Cale initially responded, promising payment upon receipt of inspection certificates but later refused to pay, claiming no direct contract existed and that Brown only fulfilled its obligations to Beam.
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Procedural History
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Brown sued Cale for breach of contract in Trial Term. The trial court, sitting without a jury, ruled in favor of Brown, finding a direct contract existed between Brown and Cale. Cale appealed. The Appellate Division affirmed the trial court’s judgment. Cale then appealed to the New York Court of Appeals.
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Issue(s)
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Whether the course of conduct and communications between Brown and Cale, after Beam’s default, were sufficient to establish a legally enforceable contract between them, independent of the original subcontract between Brown and Beam.
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Holding
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Yes, because the totality of the circumstances, including Cale’s direct communications with Brown, its promise to pay Brown, and Brown’s continued performance of work with Cale’s knowledge and consent, objectively demonstrated an intent by both parties to enter into a direct contractual relationship.
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Court’s Reasoning
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The court emphasized that determining the existence of a contract depends on the objective manifestations of the parties’ intent, as gathered from their expressed words and deeds, not on their subjective intent. The court highlighted the following factors supporting the existence of a direct contract: Brown’s threat to breach with Beam due to non-payment (implying Cale’s awareness of the issue), Cale’s offer to include Brown’s name on checks to Beam (an arrangement made solely between Cale and Brown), Brown’s decision to continue working despite Beam’s default, Cale’s assumption of the role of general contractor, Brown’s direct billing to Cale, and Cale’s acknowledgement of the balance due in its correspondence. The court quoted from the opinion that