## Facts

- Fursmidt and his father operated a valet and laundry service in a hotel under a long-running concession arrangement and used space in the hotel basement.
- The parties executed a written agreement effective February 1, 1958, for a three-year term under which Fursmidt would provide valet and laundry services and pay the hotel $325 per month.
- The contract provided that the services must meet the hotel’s approval and that the hotel was the “sole judge of the sufficiency and propriety of the services.”
- In September 1958, the hotel notified Fursmidt to discontinue services as of October 1, 1958; he vacated and ceased operations.
- A third party thereafter operated the concession, paying the hotel $250 per month.
- Fursmidt sued for breach, alleging the hotel lacked a contractual right to terminate; the hotel asserted it could terminate upon dissatisfaction and counterclaimed for damages from allegedly inadequate service.

## Issues

1. Under a contract requiring the hotel’s approval and making it the “sole judge” of service sufficiency and propriety, is termination governed by an objective “reasonable person” satisfaction standard or a subjective good-faith dissatisfaction standard?
2. Did the trial court err by instructing the jury that the hotel’s dissatisfaction had to be reasonably grounded, not merely genuine?

## Decision

- The Appellate Division reversed the judgment for Fursmidt and ordered a new trial.
- The court held the contract involved matters of judgment in service quality, so a subjective satisfaction standard applied.
- The hotel could withhold approval and terminate if it was honestly and genuinely dissatisfied, even if a reasonable person might have been satisfied.
- It was legal error to charge the jury that dissatisfaction had to have an objectively reasonable basis.

## Legal Principles

- Satisfaction clauses are construed based on the nature of the performance:
  - If performance concerns operative fitness, utility, or marketability, satisfaction is measured by an objective reasonable-person standard.
  - If performance concerns taste, judgment, or personal evaluation, satisfaction is measured by the promisor’s subjective reaction, limited by a requirement of good faith.
- Contract language making one party the “sole judge” of sufficiency and propriety supports applying the subjective, good-faith dissatisfaction standard.
- A court may not replace the contractually designated decision-maker’s judgment with a reasonable-person test when the agreement allocates approval discretion to that party and the subject matter is evaluative rather than technical.

## Conclusion

Because the concession agreement made the hotel the sole judge of whether the valet and laundry services were satisfactory and the services involved business judgment about guest-facing quality, the hotel’s honest dissatisfaction controlled; the trial court’s objective reasonableness instruction required reversal and a new trial.


Fursmidt v. Hotel Abbey Holding Corp., 10 A.D.2d 447 (N.Y. App. Div. 1960)