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Centech Group, Inc. v. Getronicswang Co.

    Brief Fact Summary.

    Plaintiff entered an agreement with the defendant to convert 55 million mircofiche personnel records into digital format. Plaintiff sub contracted part of the order to another company. The plaintiff failed to deliver per the terms. Plaintiff had a MOU signed with its subcontractor to share liability for performance. Plaintiff sued sub-contractor for breach. District court granted summary judgment in favor of Sub contractor. Plaintiff appealed.

    Synopsis of Rule of Law.

    In Virginia, a party declaring that it went into an agreement under pressure should effectively demonstrate that it was left with no other alternate option than to consent to the agreement.

    Facts.

    After Centech Group, Inc. (Centech) (offended party) entered into a contract with the U.S. Naval force (the Navy) to convert over 55 million microfiche staff records into digital format, it sub-contracted a segment of the work to I-NET to outline and build up a data conversion system. I-NET in this manner moved toward becoming Getronicswang Company (litigant). Centech neglected to perform as indicated by the terms of the prime contract with the Navy. Centech entered into an understanding with I-NET (Original MOU) with which gave that I-NET would expect risk from Centech for execution of the Navy by either (1) a novation of the sub-contract or (2) a rebuilding of the sub-contract. On the off chance that the parties were not able to accomplish both of the above, they consented to work in accordance with some basic honesty to rebuild the Navy consent to permit I-NET to end up noticeably fundamentally in charge of the expectations. Also, I-NET consented to grant over $9 million in sub-contracts to Centech over a time of years. After the parties were not able to consent to a novation or a generous rebuilding, they went into another MOU (Revised MOU) which explicitly superseded every past understanding and required I-NET to recognize and seek after $10 million worth of venture open doors for Centech. After I-NET neglected to furnish Centech with the required contracting and venture openings, Centech recorded suit in federal district court against I-NET for breach of the agreement. The district court granted summary judgment in favor of I-NET. Centech appealed.

    Issue.

    In Virginia, should a party declare that it went into an agreement under pressure effectively demonstrate that it was left with no other alternate option than to consent to the agreement?

    Held.

    Yes. In Virginia, a party declaring that it went into an agreement under pressure should effectively demonstrate that it was left with no other alternate option than to consent to the agreement.

    Dissent.

    N/A

    Concurrence.

    N/A

    Discussion.

    On appeal, Centech claimed that revised MOU wasn't valid for consideration because all pre-agreed terms were present in the original MOU. The district court correctly found that in Original MOU Centech and I-NET agreed only to work in good faith to restructure contract and in the revised MOU, they expressly agreed to allow I-NET to assume the prime contract with Navy. Under the original MOU terms, I-NET's obligations were conditional. Centech claims that the revised MOU was also made under impression because of threats made by I-NET to discontinue under the subcontract. But, I-NET’s alleged threat fails to comply with the circumstances required to show duress. Under Virginia law, not only must a threat be improper, but it “must leave the aggrieved party without any reasonable alternative other than to assent to the contract.” King v. Donnkenny, Inc., 84 F. Supp.2d 736, 739 (W.D.Va.2000). Since, Centech failed to adequately show that I-NET’s alleged threats reached the significance required by law. The judgment of the district court is affirmed.


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