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Acme Amusements & Cigarette Service v. Danny’s Italian Restaurant

A-4596-97T3 (N.J. Super. App. Div. 1999) (Unpublished)

CONTRACTS; ORAL AGREEMENTS—Parties to an oral implied-in-fact agreement may modify it by a subsequent written agreement.

In the early 1970s, a vending company leased a cigarette machine to a restaurant by oral argument. Later, also pursuant to oral agreement, the vending company installed a video game machine in the restaurant. In the Spring of 1990, the parties entered into a written agreement for the lease of a compact disc jukebox. It was undisputed that the video game machine and the cigarette machine were already in the restaurant when the parties entered into the contract. In a handwritten notation to the form agreement for the jukebox, “one cigarette machine” was included in the lease. The vending company also handwrote that the contract included “any machines necessary in the future.” The jukebox was installed in the restaurant, but shortly thereafter the restaurant complained that it did not work correctly. When the restaurant refused to pay for the jukebox, the vending company removed the video game and stopped paying the restaurant its share of the receipts from the cigarette machine. Eventually, the vending company removed the jukebox from the restaurant. For three years, the vending company continued collecting money from the cigarette machine but stopped providing the restaurant with accountings. Frustrated, the restaurant called the vending company and told them that the cigarette machine was in the parking lot covered with a tarp and chained to a fence. The vending company sued the restaurant for breach of contract and the restaurant counterclaimed for the vending company’s failure to account for and pay profits from the cigarette machine. The lower court found that neither the video machinery nor the cigarette machine were encompassed within the contract because the machines were already in the restaurant and subject to the informal arrangements customary in the industry. The lower court also found that the contract applied to the jukebox and that the jukebox did not operate properly. It found an implied term to the contract, i.e., that the vending company agreed to maintain the jukebox in good working condition. Because the jukebox was not found to be in working order, the lower court determined that there had been a breach by the vending company. The vending company appealed. The Appellate Division accepted the lower court’s finding that the jukebox was defective and agreed that the video machine was not governed by the contract. To it, the reference to “other video machines” in the contract was not proof that the existing video game was included with the six-year agreement. With respect to the cigarette machine, the Appellate Division disagreed with the lower court. It recognized that the cigarette machine was in place pursuant to an oral agreement that was implied-in-fact through the conduct of the parties and that the cigarette machine was initially leased pursuant to an oral agreement. However,“Parties to an existing contract may make limited changes or amendments to the contract through modification.” Despite the fact that the cigarette machine was placed in the restaurant before the execution of the written jukebox agreement, the Court found it logical to infer that the parties sought to enter into a six-year contract that would include a cigarette machine. Consequently, when the restaurant unilaterally took the cigarette machine out of the restaurant and placed it in the parking lot, it breached the contract. As a result, the Appellate Division remanded the matter to the lower court for a redetermination of damages.


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