## Facts

- Arnold Palmer Golf Company (Palmer), an Ohio company that designed and marketed golf equipment but did not manufacture, sought manufacturing capacity for growth.
- Palmer and Fuqua Industries, Inc. (Fuqua) discussed a business combination beginning in early 1969 and continued negotiations over multiple meetings.
- With Palmer’s assistance and approval, Fuqua acquired Fernquest & Johnson, a California golf-club manufacturer, intended as Fuqua’s contribution to a planned joint venture.
- Fuqua board minutes reflected a plan to operate the golf equipment business through a new corporation, owned 75% by Palmer interests and 25% by Fuqua, with Fuqua contributing the acquired manufacturing business.
- After negotiations, the parties executed a six-page, signed “Memorandum of Intent” confirming a “general understanding” for Fuqua to acquire 25% of Palmer in exchange for all Fernquest & Johnson stock plus $700,000 cash.
- The memorandum set out multiple detailed terms, including ownership, management, financing/loan commitments, and contemplated covenants and warranties to be included later.
- The memorandum also stated counsel would prepare a later agreement and included conditions that the transaction was subject to (i) a definitive agreement satisfactory in form and content to both sides and counsel and (ii) Fuqua board approval of the definitive agreement.
- Fuqua issued a press release describing the relationship and acquisition in terms that could be read as treating the arrangement as a firm commitment.
- In February 1970, Fuqua’s leadership decided not to proceed and informed Palmer the deal was off.
- Palmer sued in federal court for breach of contract, claiming the memorandum was enforceable; the district court granted summary judgment to Fuqua, treating the memorandum as nonbinding.
- Palmer appealed.

## Issues

1. Whether the signed Memorandum of Intent and surrounding circumstances could reasonably support a finding that the parties intended to be contractually bound.
2. Whether the “definitive agreement” and “board approval” conditions established nonbinding intent as a matter of law, or instead created a triable fact dispute.
3. Whether summary judgment was improper because intent to be bound presented a genuine dispute of material fact.

## Decision

- The Sixth Circuit reversed the grant of summary judgment for Fuqua and remanded for trial.
- The court held there was a genuine issue of material fact as to whether the parties intended the memorandum to be a binding contract.
- The court concluded that the memorandum’s definiteness, the parties’ conduct, and contextual evidence could support competing inferences on contractual intent, requiring factfinding.

## Legal Principles

- Contract enforceability depends on whether the parties understood the nature of the agreement and intended to be bound by its terms.
- Whether a preliminary writing evidences present contractual intent, or instead reflects an intent not to be bound until a later formal document, is commonly a question of fact determined from the writing read as a whole and the surrounding circumstances.
- The presence of conditions (such as preparation of a definitive agreement or board approval) does not necessarily negate contractual intent as a matter of law; such provisions may operate as conditions precedent to performance or to particular obligations, depending on the parties’ intent.
- Summary judgment is inappropriate where reasonable factfinders could draw different inferences about intent to be bound from the document’s language and extrinsic evidence.

## Conclusion

Because the signed memorandum contained detailed, promissory terms and the surrounding evidence could support a finding of present intent to be bound despite stated conditions, the Sixth Circuit held that intent was a triable fact issue and reversed summary judgment for Fuqua, remanding for trial.


Arnold Palmer Golf Co. v. Fuqua Indus., Inc., 541 F.2d 584 (6th Cir. 1976)