## Facts

- Henry & Warren Corp. owned real property on which the Congress Nursing Home operated in Brooklyn; Eugene Hollander served as its president, and his wife was the sole shareholder.
- Hollander faced criminal and regulatory pressure that threatened his ability to operate nursing homes, creating a need to transfer operational control while retaining economic value.
- A community-organized not-for-profit entity, Cobble Hill Nursing Home, Inc., was arranged to operate the facility under a receivership-related plan.
- In May 1976, Cobble Hill and Henry & Warren executed an agreement granting Cobble Hill an option to purchase the nursing home property.
- The option did not state a fixed price; instead, it required that the purchase price be set by the New York State Department of Health “in accordance with applicable laws and regulations.”
- Cobble Hill exercised the option in 1979, and the Department of Health calculated a price using its regulatory framework associated with Medicaid reimbursement and facility finance rules.
- Henry & Warren refused to convey title, asserting that the price was unfair and that the option’s pricing term was too indefinite to enforce.
- Cobble Hill sued for specific performance; the trial court dismissed for indefiniteness, and the Appellate Division affirmed.

## Issues

1. Whether an option contract is unenforceable for indefiniteness when the purchase price is to be fixed by a state agency “in accordance with applicable laws and regulations,” rather than stated as a dollar amount or formula.
2. Whether a court may grant specific performance when the parties selected a third-party governmental determination as the contract’s pricing mechanism.

## Decision

- The Court of Appeals of New York reversed and directed entry of judgment for Cobble Hill granting specific performance.
- The court held the price term was sufficiently definite because the parties selected the Department of Health to set the price by reference to an external regulatory standard.
- The court rejected the view that the absence of a conventional sale-price formula made the option unenforceable, given the objective method incorporated into the agreement.

## Legal Principles

- A contract price term is not invalid solely because it omits a specific dollar figure or explicit computational formula.
- A price term is sufficiently definite when the agreement supplies an objective method for determining price without further assent by the parties.
- Parties may lawfully delegate price-setting to a third party, including an administrative agency, when the contract ties that determination to objective standards.
- The definiteness doctrine should not be applied so rigidly as to defeat reasonable contractual expectations where the parties intended to be bound and a workable pricing method exists.

## Conclusion

The court enforced the purchase option because the parties’ intent to be bound was clear and the contract incorporated an objective, third-party pricing mechanism—Department of Health valuation under applicable regulations—making the price term definite enough to support specific performance.


Cobble Hill Nursing Home, Inc. v. Henry & Warren Corp., 74 N.Y.2d 475, 548 N.E.2d 203 (N.Y. 1989)