Sаlem Laundry Co., a Massachusetts corporation located in Salem, sold part of its business to Whyte’s Laundry, Inc., a Massachusetts corporation located in Lynn, in a written agreement dated September 30, 1980. The issue before us on appeal is whether the district court erred in concluding that the parties had no prior, oral contract to effect the sale. The existence of an enforceable contract of sale on or before September 26,1980, would relieve Salem of withdrawal liability on behalf of its former employees to the New England Teamsters and Trucking Industry Pension Fund. See 29 U.S.C. §§ 1381 et seq. (1985).
In July 1980, John Hooper, president of Salem Laundry, approached Russell Goldsmith, president of Whyte’s Laundry, about the possibility of selling a portion of Salem’s business to Whyte’s. Goldsmith told Hooper he was interested, provided certain conditions could be worked out, and that Hooper’s suggested price was fine. Hooper and Goldsmith met three more times, in August and on September 16 and 19, and discussed and agreed upon increasingly more detailed aspects of the sale. Salem’s attorney prepared the first written draft of the sales agreement in August. Whyte’s attorney prepared a new draft on September 23, which he altered slightly on September 26 in response to a telephone conversation between Hooper and Goldsmith. Hooper and Goldsmith signed that agreement on September 30.
The truck drivers in the laundry delivery system sold to Whyte’s had been represented by Local 42 of the Teamsters. As part of the collective bargaining agreement between Local 42 and Salem, Salem had been contributing to the Pensiоn Fund on the employees’ behalf for many years. Under the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C.
Salem’s theory below was based on § 558 of the Deficit Reduction Act of 1984, Pub.L. 98-369, which provided thаt no withdrawal liability would be assessed on employers that had a “binding agreement to withdraw” from a multiemployer pension plan on or before September 26, 1980. Thе United States District Court for the District of Massachusetts found that Salem did not have such an agreement, however, because neither Salem nor Whyte’s could have еnforced the sales agreement until it was signed on September 30, 1980. Standard of Review
Salem argues that this court should review the trial court’s finding as to the date of the sales agreement de novo, rather than under the “clearly erroneous” standard applicable to findings of fact. See Fed.R.Civ.P. 52(a). Because the only evidence offered on thе date of the contract was through Salem’s witnesses Hooper and Goldsmith, the company argues that the “facts” were uncontradicted, leaving only the legаl question of whether those facts indicate a prior oral contract.
We disagree. “[I]t is a question of fact whether any particular conduct or aсtions imply a contractual understanding.”
Cor-bin on Contracts
§ 18(B), at 21
(Kaufman
supp. 1984);
see Chedd-Angier Production Co. v. Omni Publications Inti, Ltd.,
Parties do not become contractually bound until they mutually assent to bind themselves to an agreement.
See
1
Williston on Contracts
§ 18, at 32 (3d ed. 1954). Courts determine that mutual assent, not on the basis of what goes on inside the parties’ heads, but rather on the basis of what they say and do. Here, Hooper’s “intention” is what Goldsmith would have reasonably understood that intention to be, and not what Hooper thought he intended at the time, nor what Hooper later said he intended. Parties can agree on every term in a contract, yet not be bound until they sign a written agreement, if they so indicate.
See Bates v. Southgate,
Hooper, Salem’s president, had every incentive to think that he and Goldsmith meant to be legally bound as early as August, because he wanted very much to sell an unprofitаble enterprise. And Goldsmith, Hooper’s longtime business and social acquaintance, has nothing to lose
at this point
by agreeing. In the rosy afterglow of an amicable salе, it is easy to think
In this situation the written agreement itself has great significance, as the district court recognized. How that document is written can determine whether it was meant as a written memorialization of an earlier contract, or an agreement enforceable only upon execution. The district court found it particularly relevant that the execution of the written agreement started the clock running on the performance of two provisions of the contract, a leasе/service arrangement and the use of the present identification on the trucks to be sold. The district court found that these timing provisions made the date of signing itself а material term of the contract, strongly suggesting that the written agreement was more than a “mere memorial of [a] contract already final by the earlier mutuаl assent of the parties.”
Rosenfield v. United States Trust Co.,
That finding was not clearly erroneous. The conduct of the parties throughout the negotiations supports an inference that they did nоt intend to be bound until a formal document was executed.
See
1
Corbin
§ 30, at 97. Both Hooper and Goldsmith testified at trial that theirs was a complex deal. They drafted agreements as early as August and amended their drafts as late as September 24 or 26.
See Tull v. Mister Donut Development Corp.,
The decision of the district court is affirmed.
Notes
. The district court mistakenly stated in its bench ruling that the date on which the agreement was signed triggered the running of the sixty weekly payments. This mistake does not undercut its finding, however. The signature date was related to the sixty week period, because the beginning of the sixty week period was pushed back when the negotiatiоn and drafting of the agreement continued on into late September. And, the district court's underlying point, that the date of the agreement was an important term of the contract, is still valid.