Skip to main content



Kahanovitz v. Electro-Biology, Inc.

A-3635-09T3 (N.J. Super. App. Div. 2011) (Unpublished)

AGREEMENTS; INTERPRETATION — The rule barring the introduction of extrinsic evidence to vary terms of a contract only comes into play once the intent of the parties has been ascertained.

An orthopedic surgeon worked for twenty five years with a company to develop medical products, primarily for use in spine surgery. Twelve years after this arrangement began, the parties entered into a consulting agreement under which the surgeon would provide services to the company relating to its programs, strategies, and products. The agreement went through several amendments prior to its expiration. A dispute arose over change to the compensation section which stated that during the term of the agreement, and for so long as the surgeon was performing services within the scope of the agreement, the company would guarantee the surgeon a minimum annual royalty of $250,000. After the agreement terminated, the company stopped requesting, and the surgeon stopped providing, services.

The surgeon filed a breach of contract suit, arguing that the agreement’s compensation clause required annual payments so long as the surgeon made his unique services to the company available on an exclusive basis. The company moved for summary judgment, arguing, as a matter of law, that the surgeon’s right to receive any payments terminated when the agreement ended. The surgeon opposed the motion and submitted certifications from several former company officials who were present during the provision’s negotiation, and who asserted a general intent that the royalty payment would continue even if the agreement itself was allowed to lapse. The lower court dismissed the suit on the company’s motion for summary judgment, finding the certifications were inadmissible extrinsic evidence being offered to prove the intention of an otherwise unambiguous contract provision. The lower court concluded that since the surgeon was no longer performing services once the contract expired, he was no longer performing services so as to entitle him to an annual royalty fee.

On the surgeon’s appeal, the Appellate Division reversed and remanded the matter for further discovery as to the meaning of the contractual provision. The Court held that the lower court erred in determining the meaning of the provision when the physician had submitted certifications of former company officers, present during the negotiations of the provision. The rule barring the introduction of extrinsic evidence to vary terms of a contract only comes into play once the intent of the parties has been ascertained. Here, the Court found the surgeon presented sufficient facts to raise a genuine issue of material fact as to whether the language at issue was intended to express the intent claimed by the surgeon and his witnesses.


MEISLIK & MEISLIK
66 Park Street • Montclair, New Jersey 07042
tel: 973-783-3000 • fax: 973-744-5757 • info@meislik.com