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that are subject to memorialization in a more complete contractual document (see Sharp Thinking No. 59
(March 2012)). Ironically, Citadel Group Ltd. v. Washington Reg. Med. Ctr., 692 F.3d 580 (7th Cir. 2012),
makes no reference to BPI Energy Holdings, Inc. v. IEC (Montgomery), LLC, 664 F.3d 131 (7th Cir. 2011),
about which we wrote there.

“A preliminary writing that reflects a tentative agreement contingent upon the successful completion of
negotiations that are ongoing[] does not amount to a contract that binds the parties,” the recent panel
stated. Moreover, such a document need not expressly disavow intent to form a contract; “magic words
are not required. . . . Words expressing contingency or dependence on a subsequent event or agreed-on
element will do. . . . (i)f the parties’ written words do not show a clear intent to be bound, then they will not
be held to a preliminary agreement.” In addition, the panel noted that “omission of crucial terms is
powerful evidence that no contract was intended.”

“Consumer Fraud Act” Is Liberally Applied

If fraud is not required for a violation of the so-called “Consumer Fraud Act” (see Sharp Thinking No.
19 (April 2009), a recent decision of the Illinois Appellate Court in Chicago demonstrates that an injury to
a consumer is not required either.

In Platinum Partners Value Arbitrage Fund, L.P. v. Chicago Board Options Exchange, 2012 IL App
(1st) 112903, the plaintiff was a securities arbitrage fund. Moreover, the transaction had nothing to do
with the typical consumer transaction: plaintiff was allegedly injured by purchasing “put” options on the
Chicago Board Options Exchange. Despite the context, a majority of the appellate panel found that an
action under the Consumer Fraud & Deceptive Business Practices Act (815 ILCS 505) was stated. “The
Consumer Fraud Act is to be interpreted liberally” and is meant to “eradicate(e) all forms of deceptive and
unfair business practices,” the majority said.

Courts Reinterpret, Uphold Employee Classification Act

Panels in two districts of the Appellate Court have interpreted the Employee Classification Act (820
ILCS 185) (see Sharp Thinking No. 11 (Aug. 2008)) so as to avoid the constitutional considerations which
led to Bartlow v. Shannon, 399 Ill.App.3d 560 (2010) (see Sharp Thinking No. 38 (Oct. 2010)).

In World Painting Co. v. Costigan, 2012 IL App (4th) 110869, and Bartlow v. Costigan, 2012 IL App
(5th) 110519, the courts, in order to construe the Act as constitutional, interpreted the Department of
Labor’s powers thereunder as merely investigatory and not involving adjudicatory findings of liability.
Moreover, the panel in Bartlow v. Costigan held that subsequent court proceedings are de novo and said
that if the Department goes to court “[t]he Department has the burden of proving a violation of the Act, and
the circuit court decides if penalties or sanctions are justified and what penalties, sanctions, or other
remedies to impose . . . a contractor accused of violating the Act is afforded all of the due process
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protections contained in” the codes of civil and criminal procedure. An order by the Department to cease
and desist was termed by the court “a no-consequence order” and the Department’s findings were
deemed not admissible in any court proceedings.

-- John T. Hundley, 618-242-0246, Jhundley@lotsharp.com
John\Sharp Thinking\#77.doc

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The Sharp Law Firm, P.C., represented the plaintiffs in Bartlow v. Shannon, 399 Ill.App.3d 560 (2010).
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