Fursmidt v. Hotel Abbey Holding Corp.
10 A.D.2d 447, 200 N.Y.S.2d 256 (N.Y.A.D. 1 Dept. 1960)

  • Fursmidt provided valet and laundry services to Hotel Abbey.  He signed a contract with Hotel Abbey to provide such services for three years at $325 a month.
    • The contract stipulated that, “the services rendered by the second party (Fursmidt) shall meet with the approval of the first party (Hotel Abbey), who shall be the sole judge of the sufficiency and propriety of the services.”
    • To be honest, this isn’t a particularly harsh provision.  It’s pretty much the same as employment at-will.
    • This clause is often called a condition of satisfaction.
  • A few months later, Hotel Abbey terminated the contract, and brought in another person to provide the same services for only $250 per month.  Fursmidt sued claiming that his services were not deficient.
    • Hotel Abbey argued that it is not for a court to decide upon the reasonableness of their conclusions if in fact it was a conclusion honestly arrived at by it.
  • The Trial Court found for Fursmidt.
    • The Trial Court found that it was not enough that Hotel Abbey could prove that they were honestly dissatisfied with Fursmidt.  It was implicit that such dissatisfaction be reasonably grounded.
  • The Appellate Court reversed and remanded for a new trial.
    • The Appellate Court found that it was incorrect to instruct the jury that satisfaction needed to be reasonably grounded.
      • Hotel Abbey can require any standard of performance they like, it doesn’t have to be reasonable.  If they want their sheets extra-white, then Fursmidt must make them extra-white, even if it goes beyond what a reasonable person would think was necessary.
    • The Court found that the only question the jury needed to answer was whether Hotel Abbey’s dissatisfaction was genuine or feigned.
  • Provisions in agreements calling for performance to the satisfaction of a party fall into two general categories:
    • In contracts relating to the operative fitness, utility, or marketability the provision is “construed as a matter of law as imposing only the requisite of satisfying a reasonable man.”
      • An objective standard.
    • In contracts providing for performance involving, “fancy taste, sensibility, or judgment” of a party, the provision must be construed literally.
      • A subjective standard.
    • Basically, if it’s a contract to do some general, generic service that knowledgeable people can objectively judge, then satisfaction really means the satisfaction of a reasonable person.  On the other hand, if it’s a contract that involves personal taste, then satisfaction means the good faith satisfaction of the person who has commissioned the work.