Villar v. Kernan
Supreme Court of Maine
695 A.2d 1221 (1997)
In 1988, Frederick Villar (plaintiff) and Peter Kernan (defendant) started Ricetta’s, Inc. (Ricetta’s), a pizza business. Villar owned 49 percent and Kernan owned 51 percent of the business. According to Kernan, Villar and Kernan agreed orally that they would only receive distributions and not salaries. Later, Ronald Stephan, the manager of Ricetta’s, acquired 1 percent of Ricetta’s from Villar and 1 percent from Kernan. In 1994, Kernan entered into a consulting agreement with Ricetta’s that paid Kernan $2,000 weekly. The agreement was approved by Kernan and Stephan at a shareholder’s meeting that Villar did not attend. Under the agreement, Kernan received $90,000 in consulting fees in 1994 and $24,000 in 1995. Villar filed suit against Kernan in federal district court, alleging breach of oral contract. The district court found that there was an oral agreement between Villar and Kernan prohibiting Kernan from receiving a salary from Ricetta’s. The district court found that unless the relevant state statute precluded the enforcement of an oral shareholder agreement, the agreement was enforceable in equity despite the statute of frauds. However, the district court could not find controlling precedent on the issue and certified to the Supreme Court of Maine the question of whether state law precluded a claim for breach of an oral contract between corporate shareholders regarding salary.
Rule of Law
Holding and Reasoning (Dana, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 723,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 723,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 45,500 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.