Cases—Termination—Notices must be “clear and unequivocal”

A seller who had consistently failed to perform adequately under a contract managed even to get the termination notice wrong—thus leading to an automatic renewal of the badly performed contract.  A federal district court in Texas, applying Illinois law, found that Sears, Roebuck & Co.’s “Termination of Sales Agreement” notice did not operate as a termination because it was, despite its title, only conditional.  By suggesting terms for a renegotiated agreement, Sears ran afoul of the rule that a notice of termination must be “clear and unequivocal.”

In another part of a convoluted decision, the court also held that there is no independent duty of good faith in contract performacne under Illinois law, and granted Sears’s motion to dismiss a count based on good faith.

Gatt Trading, Inc. v. Sears, Roebuck, & Co., 2004 U.S. Dist. LEXIS 22550 (N.D. Tex., Nov. 8, 2004).