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Real Cocktail Napkin Contract Trial Underway

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By George Khoury, Esq. on November 19, 2018 11:57 AM

Warning: The following may trigger law school exam or bar exam flashbacks.

Regardless of when you went to law school, the question surely came up in your contracts class: Is a contract written on a cocktail napkin a legit contract?

And while we all know that a legitimate contract can be executed on just about any medium, or even without a medium at all, a contract also requires more than just paper and ink. However, for one Alaska newsman, he was willing to sell his paper on a promise and signed promise to pay $1 million over a ten year period. Trial started last week, and yes, one attorney did enlarge the napkin to full "poster-board" size so the jury (and world) could get a better view.

A Promise to Pay

Notably, while the amount involved isn't minuscule, the alleged contract is short enough to fit on the smallest of cocktail napkins. It simply reads:

"I agree to pay Tony $100K at the end of each calendar year (beginning '14) for 10 years. (Signed) Alice Rogoff 4/18/14"

That's it. There's no description of what Alice is paying for, or even Tony's last name. But what is clear is that it is signed, has a set term, a set amount, and a start date. What's also clear is that Alice started to make good on the contract as she paid Tony Hopfinger the first $100K installment in January 2015.

What's the Trouble?

The backstory is rather complicated, but in short, Alice inherited a bunch of money and wanted to buy the Alaska Dispatch which Tony owned (or owned part of). It is alleged by Tony that the cocktail napkin evidenced an agreement to do a straight buyout. Alice however claims that the agreement included both Tony and his shares of the company, and that when Tony left Alaska (and the paper) in 2015, he forfeited his right to the money.

What's sure to be interesting to see is how the jury rules on the napkin contract. Specifically, the jury will be asked whether the scant terms of the napkin create a binding contract, and if not, if there is a valid, enforceable agreement between the parties.

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