On January 26, 2023, the First Department issued a decision in Claim Recovery Group LLC v. Markel Corp., 2023 NY Slip Op. 00371, holding that a term sheet was a binding agreement, explaining:
Plaintiff established its entitlement to summary judgment because the term sheet for a contemplated sale of subrogation claims was, by its terms, a legally enforceable contract to complete the sale. The term sheet unambiguously provides that “[t]he Parties intend to be legally bound to this transaction once this Term Sheet is mutually executed.” In context, the phrase “this transaction” plainly refers to the contemplated sale. Although the term sheet also provides that the transaction would be “subject to” completion of satisfactory due diligence and negotiation and execution of a purchase and sale agreement, the use of “subject to” language and call for execution of formal documentation is not dispositive.
The term sheet’s references to a “proposed” or “potential” transaction or “any resulting transaction” do not undermine this interpretation. The term sheet stated that it was drafted as a proposal but became legally binding once mutually executed and, as stated on the term sheet, “[a]ccepted and [a]greed.” The term sheet also included all material terms, including identification of the buyer and seller, description of the claims to be sold, and a formula for calculation of the purchase price.
Further, the parties’ later renegotiation, addition, or elaboration of certain terms does not negate the fact that those terms were clearly agreed upon in the term sheet. In any event, a court may not consider extrinsic evidence where, as here, the agreement is unambiguous. Nor was the term sheet rendered unenforceable simply because certain nonmaterial terms were left for future negotiation.
Defendant’s reliance on McGowan v Clarion Partners, LLC (188 AD3d 497 [1st Dept 2020], lv denied 37 NY3d 903 ) is misplaced, as the term sheet at issue in that case, unlike the term sheet here, did not contain language stating that the parties intended to be legally bound to the transaction upon execution of the term sheet.(Internal quotations and citations omitted).