source: Caselaw Access Project

author: ROWLEY, Judge:

license: Public Domain

text:
    534 A.2d 798
    Robert W. DORN v. STANHOPE STEEL, INC., Cambridge Industries, Inc. and L.B. Foster Company. Appeal of STANHOPE STEEL, INC. and Cambridge Industries, Inc.
    Superior Court of Pennsylvania.
    Argued Sept. 11, 1986.
    Filed Nov. 4, 1987.
    Reargument Denied Jan. 5, 1988.

      James P. Hollihan, Pittsburgh, for appellants.
    James R. Cooney, Pittsburgh, for appellees.
    Before BROSKY, ROWLEY and POPOVICH, JJ.
   ROWLEY, Judge:

Stanhope Steel, Inc. (Stanhope) and Cambridge Industries, Inc. (Cambridge) appeal from the judgment entered against them in the amount of $127,698.76 in favor of appellee, Robert W. Dorn, following the denial of appellants’ motions seeking post-trial relief in this action for breach of a written exclusive brokerage agreement. Three issues are raised on appeal: (1) Were obligations which Stanhope had under its brokerage contract with its agent, Dorn, extinguished as a matter of law when Stanhope voluntarily discontinued business? (2) Was the continued existence and operation of Stanhope an implied condition of the brokerage contract when the contract contained specific provisions for termination, and such provisions did not address the continued existence and operation of the corporation? (3) Is Stanhope entitled to a new trial to establish that it is excused from performing under the contract because of supervening impracticability and supervening frustration. We affirm.

The case had its genesis in a written agreement entered into between appellee and Stanhope on October 1, 1979 and a written five year extension of the agreement executed on May 1, 1981. Throughout the 1960’s and 1970’s, prior to execution of the agreement at issue here, appellee sold and leased steel pilings for R.C. Stanhope, Inc. In 1979, R.C. Stanhope, Inc. was purchased by Cambridge, a holding company. Thereafter, R.C. Stanhope, Inc.’s name was changed to Stanhope Steel, Inc. and was operated as a subsidiary of Cambridge. Shortly thereafter, Stanhope and appellee executed a written brokerage agreement. The agreement defined appellee’s role as Stanhope’s “sole and exclusive broker in the rental and sale of steel sheet piling and H-bearing piles” in certain regions and as a “broker and independent contractor engaged in promoting and selling various lines____” The agreement was for a term of three years and contained the following provision for termination before the term of three years expired:

[T]his exclusive Broker’s Agreement may be terminated at any time, at the option of Stanhope Steel, Inc. (1) in the event of your death or disability, (2) if for any reason beyond your control you are prevented from fully carrying out all of the provisions of this Broker’s Agreement, or (3) if for other reasons it is deemed advisable to the best interest of all parties concerned. Notice of any such termination, at the option of Stanhope Steel, Inc., as aforesaid, shall be given in writing at least six months ... before such termination.

In 1981, appellee sought and secured a five year extension of the 1979 agreement. The extension took effect on May 1. 1981. In early 1984 Cambridge sold the assets of Stan-hope to L.B. Foster Company. On February 7, 1984 appellee was notified in writing that the agreement was terminated.

Appellee filed the present action seeking damages for breach of the exclusive brokerage agreement against Stan-hope, Cambridge and L.B. Foster. The case was tried before a jury and the trial court directed a verdict in favor of appellee against Stanhope. The amount of appellee’s claimed damages was stipulated subject, however, to appellant’s argument that appellee, if entitled to recover at all, was entitled to recover, at the most, six months compensation. The only issues submitted to the jury were the liability of Cambridge and L.B. Foster. The jury returned a verdict in favor of appellee against Cambridge, and in favor of L.B. Foster against appellee. On appeal appellants argue that they are entitled to judgment n.o.v. or, in the alternative, a new trial.

I. Judgment N.O.V.

Appellants present four arguments in support of their contention that they are entitled to judgment n.o.v., as a matter of law, based on the record before us. Appellee, on the other hand, argues that he was entitled to, and properly received, a directed verdict based on the record. For reasons which follow, we reject each of appellants’ four claims that they were entitled to judgment n.o.v. on this record.

Our standard of review in considering appellants’ argument for judgment n.o.v. is well settled:

[O]n appeal from the refusal of the lower court to enter judgment n.o.v., the sole duty of the appellate court is to decide whether there was sufficient evidence to sustain the verdict, granting the verdict winner the benefit of every favorable inference reasonably to be drawn from the evidence and rejecting all unfavorable testimony and influences.

Walasavage v. Marinelli, 334 Pa.Super. 396, 407, 483 A.2d 509, 514-15 (1984) (citation omitted). In reviewing appellants’ arguments relative to their judgment n.o.v. claim, we will consider only the evidence on record. “In determining the sufficiency of the evidence, we consider the evidence actually received, whether the trial rulings thereon were correct or not.” Reichman v. Wallach, 306 Pa.Super. 177, 185, 452 A.2d 501, 505 (1982) (citations omitted). Additionally, it is crucial to bear in mind the distinction between appellants’ claim that they are entitled to judgment n.o.v., and their claim, addressed in Part II. of this opinion, that the trial court erred in directing a verdict in favor of appellee.

A.

Appellants first argue that they are entitled to judgment n.o.v. because any obligations which Stanhope had under the agreement were extinguished when it discontinued business and its assets were sold to L.B. Foster. At the outset, we note the general maxim that “a corporation dissolved by its voluntary act remains bound by its outstanding executory contracts.” 19 Am.Jur.2d Corporations § 2888. In the case before us, the act of selling Stanhope’s assets to L.B. Foster was the functional equivalent to corporate dissolution because all of the assets were sold and the company went out of business. Thus, the distinction is one without a difference in this case. Professor Williston states in his treatise that where the corporation voluntarily dissolves itself, “a contract, although made impossible of performance, is made so by the act of the corporation, and [the corporation] or its assets are liable for its failure to fulfill its obligation.” 18 Williston on Contracts (1978) § 1960; Martin v. Star Publishing Co., 50 Del. 181, 126 A.2d 238, 243 (1956). These concepts are addressed by §§ 1907 and 2111 of the Pennsylvania Business Corporation Law. “The dissolution of a business corporation ... shall not take away or impair any remedy given against such corporation, its directors or shareholders, for any liability incurred prior to such dissolution, if suit thereon is brought and service of process had before or within two years after the date of such dissolution.” 15 Pa.S. § 2111(A). As to corporate mergers, “[t]he surviving or new corporation shall thenceforth be responsible for all the liabilities and obligations of each of the corporations so merged or consolidated.” 15 Pa.S. § 1907. These statutes and general principles support the view, preferable to that of appellants, that contracts generally survive the discontinuance of business operations.

Appellants’ contention that their obligations were extinguished by reason of discontinued operations and sale of assets must fail unless the agreement falls within the purview of a valid exception. In determining whether the agreement in question falls within a valid exception to the general rule, it is important to distinguish between employment contracts and agency contracts. A corporation’s rights and duties regarding its employee or agent vary according to the nature of the relationship. The distinction becomes crucial when termination is involved. A contract of employment for a definite term cannot be lawfully terminated by an employer prior to the expiration date. Alpern v. Hurwitz, 644 F.2d 943 (2d Cir.1981). However, a principal always has the power to revoke agency. Restatement (Second) of Agency § 118, comment b. Nevertheless, such power to revoke does not necessarily absolve the principal of liability for breach of the agency contract. Under the Restatement, “[a] principal has a duty not to repudiate or terminate the employment in violation of the contract of employment.” Restatement (Second) of Agency § 450.

There can be no doubt that the relationship between Stanhope and Dorn was one of principal and agent. First, Stanhope referred to the agreement as a “brokerage arrangement,” and the agreement states that Dorn is “acting as a broker and independent contractor.” As stated in 12 Am.Jur.2d Brokers § 30, “[t]he essential and basic feature underlying the relation of a broker to his employer is that of agency, and the principles of law applicable to principal and agent govern their respective rights and liabilities throughout----” Second, the agreement specified that Dorn’s duties were to “diligently and aggressively promote the rental, sale, and purchase for Stanhope Steel of [steel sheet piling and H-bearing piles] by diligently calling on customers and prospective customers located in your exclusive territories.” This comports with the view that “an agent represents his principal in business dealings and is employed to establish contractual relations between the principal and third persons, while a servant is not.” 53 Am.Jur.2d Master & Servant § 3. Thus, the terminology given to the agreement, and the duties thereunder, establish that a contract of agency existed between Stanhope and Dorn, and not a contract of employment.

“[T]o terminate an agency, there must be either a lapse of time, accomplishment of the anticipated results, external changes in the relationship (e.g., death of parties, changes in business conditions), or mutual consent, revocation, or renunciation.” Scott v. Purcell, 264 Pa.Super. 354, 399 A.2d 1088, 1093, aff'd 490 Pa. 109, 415 A.2d 56 (1979). The sale of Stanhope’s assets undoubtedly constituted an external change in the relationship. Therefore, we hold that the agency agreement between Stanhope and Dorn was terminated by operation of law when Stanhope voluntarily discontinued operations.

We now address the question of whether appellants were entitled to judgment n.o.v. in light of the termination. If, as appellants claim, Stanhope’s obligations to Dorn were extinguished when the agency agreement was terminated, appellants would be entitled to judgment n.o.v. For reasons which follow, we find that Stanhope remained, obligated under the agreement to pay Dorn the agreed upon compensation, notwithstanding our holding that the voluntary dissolution terminated the agency agreement by operation of law. In reaching this conclusion we look to the seminal case of John L. Rowan & Co. v. Hull, 55 W.V. 335, 47 S.E. 92 (1904), which has been widely cited for the proposition that although an agency, not coupled with an interest, but of a fixed duration, may be revoked by the principal at will, the principal will be liable to the agent for damages for wrongful revocation within such time. Geyler v. Dailey, 70 Ariz. 135, 217 P.2d 583 (1950); Levander v. Johnson, 181 Wis. 68, 193 N.W. 970 (1923); Rucker & Co. v. Glennan, 130 Va. 511, 107 S.E. 725 (1921); Cloe v. Rogers, 31 Okl. 255, 121 P. 201 (1912); Hancock v. Stacy, 103 Tex. 219, 125 S.W. 884 (1910); Novakovich v. Union Trust Co., 89 Ark. 412, 117 S.W. 246 (1909).

In Rowan, the owner of a farm entered into a written agreement with a real estate agent to list his farm for a period of three months. The agent found a buyer during that time, but the owner decided not to sell and revoked the agent’s authority to find a buyer. The agent sued to recover his commission under the agreement. The owner/principal contended that he had the power to revoke at any time, notwithstanding the three-month term under the agreement, and that the agent at most was entitled to compensation for his expenses incurred under the power. The Court held that the agent was entitled to his full commission. It reasoned:

[T]he principal may revoke the authority at any time. But it by no means follows that, though possessing this power, the principal has a right to exercise it without liability, regardless of his contract in the matter. It is entirely consistent with the existence of the power that the principal may agree that for a definite period he will not exercise it, and for the violation of such agreement the principal is as much liable as for the breach of any other contract.

47 S.E. at 93. We agree with the reasoning in Rowan, and we adopt the principles set forth by that court. Under the facts of the case at bar, we find no material difference between appellant Stanhope’s decision to voluntarily discontinue its business by selling its assets to L.B. Foster, thereby eliminating the purpose of its relationship with appellee, and the owner’s exercise of his right to terminate the agency in Rowan. The methods of terminating the agent/broker’s authority were different, but the agent/broker has been no less wronged in either case, and liability attaches to the same extent, due to the voluntary nature of the principal’s conduct in each case. Therefore, we hold that the trial court acted properly in directing that the verdict be entered in favor of the appellee.

We are cognizant of cases which hold that a principal will not be liable for breach of “output” agreements with an agent, where the principal, in good faith, was forced to cease production due to circumstances beyond its control. In Sheesley v. Bisbee Linseed Co., 337 Pa. 197, 10 A.2d 401 (1940), the defendant manufactured edible oils from crushed seeds and sold the meal as a by-product. Plaintiff, a livestock feed dealer with many years of sales experience, entered into an exclusive brokerage contract with defendant, agreeing to aggressively push the sale of Colza Oilmeal in certain specified counties of Pennsylvania and Maryland. Defendant’s letter agreement covered “only our production of pure Colza Oilmeal ... and all other products which we produce are specifically exempted from this agreement.” Id., 337 Pa. at 200, 10 A.2d at 403. The contract was for a period of one year with an option to extend it to five years. When Congress imposed a two cents per pound tax on import of the seed, defendant determined that the retail price of the meal would be too high for the product to sell. Id. Defendant ceased production, and plaintiff brought suit for breach of contract.

The Court found that because the written instrument expressly stated “[t]his agreement covers only our production of pure Colza Oilmeal,” it was an output contract. As such, the Court held, there was no implied obligation to keep the plant in operation. Id., 337 Pa. at 202, 10 A.2d at 404. Thus, since the action was taken in “entire good faith and not for the purpose of injuring plaintiff,” the Court reasoned, defendant did not violate any of its obligations to plaintiff by ceasing production of the product.

In Du Boff v. Matam Corp., 272 A.D. 502, 71 N.Y.S.2d 134 (1947), plaintiffs were appointed sales agents for “all home appliance products produced” by defendant for a period of five years. Defendant liquidated its business and sold all assets. The Court held that defendant had no obligation to continue in business, since a requirements/output contract was involved. As with Sheesley, disposition of this case turned on the fact that a requirements/output contract was involved.

The case at bar differs materially from the afore-mentioned cases in that the contract cannot be construed as a requirements or output contract. Dorn contracted to sell “steel sheet piling and H-bearing piles,” not all the steel sheet piling and H-bearing piles Stanhope produces. Consequently, when Stanhope ceased producing those items by going out of business, the company breached its agreement with Dorn.

B.

Appellants argue, in the alternative, that they are entitled to judgment n.o.v. because there is an implied condition in the brokerage agreement that Stanhope’s obligation would remain effective only so long as it remained in business. Appellants assert that McDole v. Duquesne Brewing Company, 281 Pa.Super. 78, 421 A.2d 1155 (1980) and Von Lange v. Morrison-Knudsen Company, Inc., 460 F.Supp. 643 (M.D.Pa.1978) support this proposition. Because “[c]ontingencies not provided against in a written agreement will not ordinarily excuse performance,” Swarthmore Boro. v. Philadelphia Rapid Transit Co., 280 Pa. 79, 84, 124 A. 343, 345 (1924), we first examine the process of determining when an agreement may be made subject to an implied condition such that the occurrence or non-occurrence of the condition would extinguish a party’s duty to perform under a contract.

“An event may be made a condition either by the agreement of the parties or by a term supplied by the court.” Restatement (Second) of Contracts § 226. Although commentators have classified conditions as express, constructive, implied-in-law and implied-in-fact, we agree with Professor Murray’s suggestion that it is preferable to categorize conditions as either express or constructive. J. Murray, Murray on Contracts, § 143 (1974). An express condition is one that the parties manifested either by their words or conduct, while a constructive condition is one supplied by the court in the interest of equity and justice even though the parties did not discuss or consider the matter. Id. No particular language is required to create an express condition. “An intention to make a duty conditional may be manifested by the general nature of an agreement, as well as by specific language. Whether the parties have, by their agreement, made an event a condition is determined by the process of interpretation.” Restatement, supra, comment a. For example, the purpose of the parties in entering the agreement is given great weight. Id. As to constructive conditions, comment c of the Restatement § 226 states, “[w]hen the parties have omitted a term that is essential to a determination of their rights and duties, the court may supply a term which is reasonable in the circumstances____” In comment c to the Reporter’s Note following

§ 226, the difficulty in attempting to separate the two types of analyses is discussed.

Whether a court is inferring a condition from the parties’ unclear expression of intention or constructing one as a matter of lawmaking is often unclear, because the processes overlap: the values that encourage a court to construct a condition were usually present when the parties were negotiating and thus support inferences about their actual intentions.

Further, a court should not create a constructive condition if it would clearly conflict with another provision of the contract. 3A Corbin on Contracts (1960) § 653. See also Restatement, supra, § 227 (Standards of Preference with Regard to Conditions) and § 229 (Excuse of Condition to Avoid Forfeiture).

With these precepts in mind, we direct our attention to McDole, in which employees of Duquesne Brewing filed an action in equity seeking injunctive relief and money damages when, due to continued economic losses, Duquesne closed its brewing operation and the employees lost their jobs. The employees contended that their termination was in violation of lifetime employment contracts they had entered into with Duquesne fourteen years earlier.

The chancellor in McDole found that the parties, during contract discussions, had not discussed or contemplated the possible shutdown of the brewery. In rejecting the employees’ request for relief, the chancellor concluded

it was the intent and belief of the parties, when the individual employment agreements were negotiated, that Duquesne would continue in the particular business in which the Appellants were employed. The Chancellor stated: “The implied condition that [Duquesne] would continue in the brewing business was breached in 1972 through no fault of either party, and thus, ‘frustrated the purpose’ for which the contracts of 1958 were made.”

Id. 281 Pa.Super. at 82, 421 A.2d at 1157. The trial court en banc affirmed the chancellor’s denial of relief to the employees, finding that the parties’ contemplation of Duquesne’s continued corporate existence resulted in an implied condition in the individual contracts of employment. This Court agreed with that conclusion, and noted that the method of payment set forth in contracts, by reference to the current collective bargaining agreement or the prevailing rate of pay in the brewery, offered further support for its conclusion because if the brewery ceased operation, then the provisions would have no sensible application. Lastly, the Court pointed out that other jurisdictions had reached similar conclusions when called upon to interpret lifetime or permanent contracts.

In Von Lange, a diversity action relied upon by appellants, an employee and the president/majority shareholder of a corporation participating in a partnership for the manufacture of bonded rail joints, brought an action in their own behalf against the other corporate partner for breach of a sales-representative agreement. The agreement, which was entered into at the same time as the partnership agreement, provided that plaintiffs would sell the rail joints for the partnership. When defendant terminated the partnership, it also terminated the sales-representative agreement. Plaintiffs asserted that termination of the sales agreement constituted a breach and they sought money damages for the monthly payments provided for in the agreement which had a term of three years. The case was tried non-jury and the district court made findings of fact, conclusions of law, and set forth its reasons for entering judgment in favor of defendant. The court concluded that the termination of the partnership agreement also served to terminate the sales-representative agreement and, alternatively, that an implied term of the sales agreement was the continued existence of the partnership business. The district court specifically found that the sales agreement provided for the possibility of termination, but did not provide for a method of termination. The court noted that where there is no express provision in a contract as to its duration or termination, the intentions of the parties may be determined from factors outside the agreement. The court then examined the circumstances surrounding the execution of the sales agreement and found that the following factors led to the conclusion that the existence of the partnership was an implied condition of the sales-representative agreement:

the Sales Representative Agreement concerned only the sale of bonded rail joints produced by the partnership; the $4,500 monthly payment was solely an advance against commissions to offset expenses in generating sales; the Von Langes under the agreement were to use their best efforts to obtain orders for bonded rail joints, and finally the Sales Representative Agreement specifically referred to termination before expiration of the three-year term.

Von Lange at 648-649.

Appellants point to the following similarities between the present case on the one hand, and McDole and Von Lange on the other: 1) on cross-examination, appellee conceded that the parties did not discuss the prospect of Stanhope discontinuing business prior to entering the 1979 agreement; 2) appellee received commissions under the agreement; 3) appellee’s duties were to promote the rental, sale and purchase of Stanhope’s products; and 4) after Stanhope sold its assets, it no longer had a product to market and appellee’s entitlement to receive a draw on commissions terminated since he could no longer make sales or market a nonexistent product.

We find, however, that appellants overlook crucial factual distinctions which distinguish McDole and Von Lange from the case before us. Of critical importance in this case is the fact that the length of the brokerage contract is specified (five years). In McDole, however, our Court was construing “lifetime” employment contracts. The panel upheld the chancellor’s findings precisely because a wide range of authority holds that “lifetime” employment contracts exist only so long as the employer remains in business. McDole v. Duquesne Brewing Co., 281 Pa.Super. at 85, 421 A.2d at 1159. Because the issues before us concern neither “employment contracts” nor contracts of “lifetime” duration, appellants’ reliance on McDole is misplaced.

As to Von Lange, we initially point out that this Court is not bound by a federal district court’s interpretation of state law. Commonwealth v. Lacey, 344 Pa.Super. 576, 496 A.2d 1256 (1985). However, we may look to the federal court’s analysis if we are persuaded by its logic. Id. We agree with the trial court that the present case is distinguishable from Von Lange on the basis that the agreement to which Stanhope was bound provides both for specific grounds and a specific method for termination. Von Lange involved the interpretation of two agreements, both negotiated, executed and made effective as of the same date, by the same parties. In reaching its decision, the district court found that the parties’ failure to provide for a method of termination in their sales representative agreement made it necessary to look outside that agreement in order to determine whether it was conditioned on the existence of the partnership. To reach its result, the court relied on “a general rule of contract law that where two writings are executed at the same time and are intertwined by the same subject matter that [sic] they should be construed together and interpreted as a whole.” 460 F.Supp. at 647. Thus, the holding in Von Lange, that the principal was liable to pay the commissions to his agent only so long as the partnership existed, is founded on a narrow set of facts not present in the instant case.

Two other cases cited by appellants as support for their “implied term” argument are distinguishable on their facts. American Bakery & Confectionery Workers v. Liberty Baking Co., 242 F.Supp. 238 (W.D.Pa.1965) and Fraser v. Magic Chef-Food Giant Markets, Inc., 324 F.2d 853 (6th Cir.1963) are inapplicable to this matter because the courts in those cases were construing collective bargaining agreements. Collective bargaining between a labor union and management generally results in a “trade agreement” rather than a “contract of employment.” Amalgamated Association of Street, Electric Railway and Motor Coach Employes (sic) of America, Division 85 v. Pittsburgh Railways Company, 393 Pa. 219, 142 A.2d 734 (1985). Appellants would have us mix apples and oranges in applying the holdings in those cases to the matter before us. Said the court in Fraser:

Rights of employees under a collective bargaining agreement presuppose an employer-employee relationship. A collective bargaining agreement, in ordinary usage and terminology, does not create an employer-employee relationship nor does it guarantee the continuance of one. Employees’ rights under such a contract do not survive a discontinuance of business and a termination of operations.

324 F.2d at 856. Because Fraser and American Bakery stand only for the narrow proposition that employees’ rights under a collective bargaining agreement do not ordinarily survive a discontinuance of business and termination of operations, we decline to follow them in this case.

Our Supreme Court has recently noted that “[t]he law will not imply a different contract than that which the parties have expressly adopted. To imply covenants on matters specifically addressed in the contract itself would violate this doctrine.” Hutchison v. Sunbeam Coal Corp., 513 Pa. 192, 198, 519 A.2d 385, 388 (1986).

[Appellants] fail to notice an important distinction in contract law between cases in which parties have agreed on a term, and cases in which they have remained silent as to a material term or have discussed the term but did not come to an agreement. The law will imply a term only for omitted covenants. There can be no implied covenant as to any matter specifically covered by the written contract between the parties.

Reading Terminal Merchants Association v. Samuel Rappaport Associates, 310 Pa.Super. 165, 176, 456 A.2d 552, 557 (1983) (citation omitted). Because McDole and Von Lange are distinguishable, appellants have failed to present any authority, nor has our research revealed any, for the proposition that a trial court may hold, as a matter of law, under evidence similar to that admitted in the present case that a principal may be excused from performing under a brokerage agreement on the ground that it has voluntarily chosen to sell its assets. We have reviewed the evidence admitted at trial — including the agreement itself and appellee’s testimony — under the appropriate standard, and we conclude that appellants are not entitled to judgment n.o.v., either by operation of law or under the theory of an implied condition. In sum, by providing for a specific method of termination in the agreement, appellants were bound to follow the terms of the agreement in seeking termination. Therefore, the trial court did not err in concluding that appellants were not entitled to judgment n.o.v.

C.

Next, appellants, in support of their claim that they are entitled to judgment n.o.v. as a matter of law, argue that the agreement provides Stanhope with the exclusive option to terminate plaintiffs employment at any time, subject to six months notice. Their claim focuses on the following language which appears in the termination provisions of the agreement:

[T]his exclusive Broker’s Agreement may be terminated at any time, at the option of Stanhope Steel, Inc____ (3) if for other reasons it is deemed advisable to the best interest of all parties concerned.

R.R. 277a-278a; 744a-746a. Appellants argue that the deteriorating financial condition of Stanhope, which culminated in the sale of its assets and its inability to meet even payroll costs, led to the determination, by Stanhope, that it would be in the “best interest of all parties concerned” to terminate the agreement. Therefore, they submit that the language is unambiguous and that they are entitled to judgment n.o.v. as a matter of law.

The trial court rejected appellants’ contention, finding as a matter of law that they could not be heard to say that termination of appellee’s contract would be in his best interest. We agree..

Stanhope’s option to terminate the brokerage agreement with appellee was limited to those situations in which it would be in “the best interest of all parties concerned.” Appellants have failed to point to any best interest of the appellee that would be served by his termination. In fact, the only interest served by termination of the agreement was Stanhope’s. Their interpretation of the clause suggests that Stanhope had the unfettered discretion to decide what was in the appellee’s best interest; however, the language of the clause cannot reasonably be read to support such an interpretation because the clause limits the exercise of the option to situations in which termination would serve the best interest of all the parties, including appellee. Moreover, if we were to follow such an interpretation, we would be sanctioning an illusory promise, by which Stanhope has suffered no detriment. See J. Murray, Murray on Contracts § 76 (1974). If Stanhope wished to exercise the option without any restrictions whatsoever, the agreement could have been written to reflect that intention. By restricting termination to those situations in which the best interest of all parties will be served, and by not reading the clause as giving Stanhope the sole discretion in terminating appellee, we give effect to the whole agreement and avoid the illogical result of allowing Stanhope to terminate a five-year agreement at will.

D.

Finally, Cambridge in support of its argument for judgment n.o.v. argues that the evidence was insufficient to hold it liable for the obligations of its subsidiary, Stanhope, arising out of the agreement. Cambridge submits that the evidence presented at trial established that Stanhope was a separately-operated subsidiary, with separate management, officers, books, records and offices; and, that although appellee was aware of Cambridge’s separate existence, he made no attempt to contract with Cambridge. However, Cambridge downplays the fact that, with the exception of Russell Stanhope, all of Stanhope’s officers were also officers of Cambridge, and that Henry Lange, the president of Cambridge, was consulted prior to the extension of appellee’s contract in 1981.

Appellee argues that the evidence was sufficient to establish either that Cambridge was a party to the contract with appellee, or that Cambridge exercised control over Stan-hope’s dealings with appellee so that any separation between the corporations was illusory. Appellee relies on the following: all terms of the agreement between appellee and Stanhope were subject to the approval of Cambridge’s president, Henry Lange; the agreement was drafted by counsel for Cambridge; Stanhope had to secure the approval of Cambridge’s president to extend the agreement, as evidenced by a letter from Stanhope to appellee which stated that Lange would grant the extension, R.R. 748a, and that appellee was terminated by Lange. Appellee concedes that Lange was purportedly acting as an officer of Stanhope when he terminated appellee, but notes that a subsequent offer of severance pay was made by Lange on stationery bearing the Cambridge name.

The trial court rejected Cambridge’s argument, finding that the evidence established that Cambridge, acting through Lange, granted appellee the extension he was working under at the time of termination and that Cambridge terminated the contract. The court also noted that after Stanhope was purchased by Cambridge, it became merely a department of Cambridge. Central to the trial court’s conclusion was that although appellants observed many of the requirements for maintaining separate corporate identities, they did not do so in their dealings with appellee. We conclude that the trial court adequately discussed and properly disposed of Cambridge’s challenges to the evidence.

In summary, having reviewed the record and the arguments advanced by appellants, we conclude that the evidence was more than sufficient to sustain the verdict. We hold that appellants are not entitled to judgment n.o.v. on this record.

II. A New Trial

Appellants alternatively argue that if they are not entitled to judgment n.o.v., they are at least entitled to a new trial. They assert that the issue of whether Stanhope’s continued existence was an implied condition of the agreement was at least a question of fact for the jury and that the trial court therefore erred in directing a verdict in favor of appellee. Appellants submit that there were disputed issues of material and relevant fact which precluded the entry of a directed verdict, that the issue should have been submitted to the jury, and that the trial court improperly excluded evidence relevant to the issue of whether an implied condition existed. Specifically, appellants allege: that the trial court erred in excluding the testimony of Stanhope’s President as to discussions which occurred during the negotiation of the brokerage agreement; that the language of the termination provision is ambiguous and should have been submitted to the jury; that the doctrines of supervening impracticability and supervening frustration excused Stanhope from performance; and, that the verdict was against the weight of the evidence. We address these issues individually.

“The grant or denial of a new trial is within the sound discretion of the trial court, whose decision will be reversed only where the record indicates that the trial court committed an error of law or clearly and palpably abused its discretion.” Walasavage v. Marinelli, supra, 334 Pa.Super. at 407, 483 A.2d at 515 (citation omitted). Because appellants allege that the trial court erred in excluding evidence concerning the alleged implied condition, we must consider all of the evidence offered by appellants, whether it was admitted or not, in reviewing the propriety of the denial of a new trial. See Waddle v. Nelkin, 511 Pa. 641, 515 A.2d 909 (1986) (Zappala, J. announcing judgment of the Court) (unlike a judgment n.o.v., a motion for new trial does not test the verdict itself, but rather, the legal proceedings resulting in the verdict and the basis of a new trial motion is not that the judgment is unsupported by sufficient evidence, but that an alleged trial error affected the verdict); Stewart v. Chernicky, 439 Pa. 43, 54-5, n. 11, 266 A.2d 259, 266 n. 11 (1970) (correction of errors in exclusion of evidence may properly be the subject of a motion for new trial). As to the allegation of error regarding the trial court’s entry of a directed verdict, we are guided by the following standard.

A directed verdict can properly be granted by a court only if the facts are clear and free from doubt. Correll v. Werner, 293 Pa.Super. 88, 90, 437 A.2d 1004, 1005 (1981). In ruling on a motion for directed verdict, a court must “accept as true all facts and proper inferences which tend to support the contention of the party against whom the motion has been made and must reject all testimony and inferences to the contrary.” Thomas v. Allegheny & Eastern Coal Co., 309 Pa.Super. 333, 339, 455 A.2d 637, 639 (1982). Accord: Correll v. Werner, supra.

Person v. C.R. Baxter Realty Co., 340 Pa.Super. 537, 540, 490 A.2d 910, 911 (1985). On appeal, we must determine whether the trial court abused its discretion or committed an error of law which controlled the outcome of the case. Jozsa v. Hottenstein, 364 Pa.Super. 469, 528 A.2d 606 (1987).

A.

In requesting a new trial, appellants argue that the trial court erred in excluding the testimony of Russell Stanhope, President of Stanhope Steel at the time, as to discussions which occurred during the negotiation of the brokerage agreement and circumstances which existed when the agreement was extended and when Stanhope discontinued its operations. However, neither at trial, nor on appeal, do appellants specifically set forth the nature of Mr. Stanhope’s testimony on this issue. They do not allege that he would testify that the parties discussed whether the contractual relationship between them was contingent on the continuance of Stanhope’s business. In fact, appellants’ offer of proof focused on other matters. Counsel indicated that Mr. Stanhope would testify that the company was losing money and that appellee’s agreement was terminated for this reason. There is no indication whatsoever that he would have contradicted appellee’s testimony that the issue concerning the continued operation of Stanhope was never discussed before the agreement was signed. If Mr. Stan-hope’s testimony would have been that the matter was never discussed, then appellants were not prejudiced by the exclusion of his testimony since they were able to establish the same point when they cross-examined appellee. Therefore, we conclude that the trial court did not err in denying appellants’ motion for a new trial on that basis.

Appellants also argue that McDole requires that the issue of whether the parties intended the agreement to survive the discontinuance of Stanhope’s operations should have been submitted to the jury because it was a factual issue. Under the facts and law of the present case, we find no error in the trial court’s entry of a directed verdict in favor of appellee against Stanhope and, therefore, appellants are not entitled to a new trial.

B.

We must also reject appellants’ claim that the language of the termination provision of the agreement is ambiguous and should have been submitted to the jury in order for it to resolve the ambiguity. In Hutchison v. Sunbeam Coal Corp., supra, the Supreme Court set forth the following guide for courts presented with a claim that a provision of a contract is ambiguous.

Determining the intention of the parties is a paramount consideration in the interpretation of any contract. Robert F. Felte, Inc. v. White, 451 Pa. 137, 143, 302 A.2d 347, 351 (1973); Unit Vending Corp. v. Lacas, 410 Pa. 614, 617, 190 A.2d 298, 300 (1963). The intent of the parties is to be ascertained from the document itself when the terms are clear and unambiguous. Steuart v. McChesney, 498 Pa. 45, 48-49, 444 A.2d 659, 661 (1982); In re Estate of Breyer, 475 Pa. 108, 115, 379 A.2d 1305, 1309 (1977). However, as this Court stated in Herr Estate, 400 Pa. 90, 161 A.2d 32 (1960), “where an ambiguity exists, parol evidence is admissible to explain or clarify or resolve the ambiguity, irrespective of whether the ambiguity is created by the language of the instrument or by extrinsic or collateral circumstances.” Id., 400 Pa. at 94, 161 A.2d at 34.
We first analyze the lease to determine whether an ambiguity exists requiring the use of extrinsic evidence. A contract is ambiguous if it is reasonably susceptible of different constructions and capable of being understood in more than one sense. Metzger v. Clifford Realty Corp., 327 Pa.Superior Ct. 377, 386, 476 A.2d 1, 5 (1984); Commonwealth State Highway and Bridge Authority v. E.J. Albrecht Co., 59 Pa.Commonwealth Ct. 246, 251, 430 A.2d 328, 330 (1981). See also Black’s Law Dictionary 73 (Rev. 5th ed. 1979). The court, as a matter of law, determines the existence of an ambiguity and interprets the contract whereas the resolution of conflicting parol evidence relevant to what the parties intended by the ambiguous provision is for the trier of fact. Easton v. Washington County Insurance Co., 391 Pa. 28, 137 A.2d 332 (1957); Fischer & Porter Co. v. Porter, 364 Pa. 495, 72 A.2d 98 (1950). See generally 4 Williston on Contracts § 616 (3d ed. 1961).

Id. 513 Pa. at 200-01, 519 A.2d at 389-90. In the present case, the trial court correctly concluded that the language was not ambiguous and could not reasonably be interpreted in the manner advanced by Stanhope; hence, it did not err in refusing to submit the issue to the jury.

C.

Appellants argue that they are entitled to a new trial on the issue of whether Stanhope was excused from performance under the brokerage agreement by virtue of the doctrines of supervening impracticability and supervening frustration. Under the doctrine of supervening impracticability, a party’s duty to perform pursuant to a contract is discharged where such performance is made “impracticable,” through no fault of its own, “by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made.” Restatement (Second) of Contracts § 261. Comment d to § 261 defines “impracticable:”

Performance may be impracticable because extreme and unreasonable difficulty, expense, injury, or loss to one of the parties will be involved. A severe shortage of raw materials or of supplies due to war, embargo, local crop failure, unforeseen shutdown of major sources of supply, or the like, which either causes a marked increase in cost or prevents performance altogether may bring the case within the rule stated in this Section. Performance may also be impracticable because it will involve a risk of injury to person or to property, of one of the parties or of others, that is disproportionate to the ends to be attained by performance. However, “impracticability” means more than “impracticality.” A mere change in the degree of difficulty or expense due to such causes as increased wages, prices of raw materials, or costs of construction, unless well beyond the normal range, does not amount to impracticability since it is this sort of risk that a fixed-price contract is intended to cover.

The doctrine of supervening frustration is set forth in § 265 of the Restatement. That section states:

Where, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.

Restatement (Second) of Contracts § 265.

Stanhope was permitted to make a detailed offer of proof of the evidence it would present in support of its defense which was based on the financial problems Stanhope was experiencing at the time of plaintiff’s termination, but the trial court refused to allow the matter to go to the jury. R.R. 421a-435a. According to appellants:

The evidence which Stanhope sought to introduce demonstrates that: (1) Stanhope was losing vast amounts of money during the 1980-1983 period (R.R. at 421a-430a); (2) Cambridge advanced and loaned Stanhope vast amounts of money during the 1980-1983 period (R.R. at 434a); (3) Stanhope’s largest creditor advised Stanhope that it would not [sic] longer advance funds (R.R. at 434a-435a); and (4) at the time Stanhope terminated Dorn’s contract, it did not have enough money to pay its operating expenses and payroll costs (R.R. at 432a).

Appellants’ brief at 29. This, coupled with the increase in interest rates, was the basis of Stanhope’s justification of its discussion to terminate the agreement. Appellants argue that the trial court’s exclusion of this evidence, and its refusal to submit the issue to the jury, was erroneous and entitles appellants to a new trial.

We are unpersuaded by appellant’s arguments and we conclude that the trial court did not err in refusing to submit the matter to the jury. Stanhope created the supervening event by selling its business. Although appellants have argued that Stanhope was compelled to take this action as a result of market forces beyond its control, we agree with the trial court that the doctrines of commercial impracticability and frustration of purpose are to be applied sparingly and, on the basis of the record before us, including appellants’ offer of proof, we conclude that appellants have failed to make out that the change in the business environment was “well beyond the normal range.” See W.R. Grace and Co. v. Local Union 759, 461 U.S. 757, 768 n. 12, 103 S.Ct. 2177, 2185 n. 12, 76 L.Ed.2d 298 (1983) (“Economic necessity is not recognized as a commercial impracticability defense to a breach-of-contract claim.”); Louisiana Power & Light Co. v. Allegheny Ludlum Industries, Inc., 517 F.Supp. 1319 (E.D.La.1981) (mere fact that performance under contract would have deprived defendant of its anticipated profit and resulted in loss on contract was insufficient to show commercial impracticability, there being requirement of showing not only that defendant would perform at a loss, but also that loss would be especially severe and unreasonable). This distinction must be carefully heeded, otherwise, every agreement that becomes disadvantageous to a party, as a result of a subsequent downturn in the economy, would entitle that party to be excused from performing under the agreement.

Appellants cite Gulf Oil Corp. v. Federal Power Commission, 563 F.2d 588 (3rd Cir.1977), cert. denied, 434 U.S. 1062, 98 S.Ct. 1235, 55 L.Ed.2d 762 (1977) for the proposition that a party’s contractual obligations may be excused by commercial impracticability where “the cost of performance has in fact become so excessive and unreasonable that the failure to excuse performance would result in grave injustice.” Id. at 599. We think appellants’ reliance on this case is unjustified. Gulf entered into a “Gas Purchase Contract” to deliver on a daily basis a large, specified quantity of natural gas to the pipelines of the Texas Eastern Transmission Company. Gulf had expected to obtain most of the gas from a nearby field in Plaquemines Parish, Louisiana, but it soon became evident to Gulf that it had vastly overestimated the reserves of that field. Gulf argued that because neither party had “entertained the thought that Gulf would be required to deliver gas from far off places at ... ‘exorbitant’ costs,” the contract should be modified. Id. at 599. Under the facts of that case, the Third Circuit panel rejected a contention similar to that which appellants make in the case at bar, i.e., that performance may be excused if the cost of performance becomes so excessive and unreasonable as to make performance impracticable. The court held, “[t]he party seeking to excuse [its] performance [under the doctrine of supervening impracticability] must not only show that [it] can perform only at a loss but also that the loss will be especially severe and unreasonable” (emphasis added). Id. at 600. The court found that Gulf had failed to make such a showing.

Appellants, in their offer of proof, have not demonstrated that they had intended to make such a showing here. Supervening impracticability cases such as Gulf Oil, Louisiana Power and Light, and Aluminum Co. of America v. Essex Group, Inc., 499 F.Supp. 53 (W.D.Pa.1980), each involve a particular contract which had become onerous and threatened the financial health of the company. However, in the matter before us, nowhere have appellants alleged that their contract with appellee is at the root of their alleged corporate losses. Rather, appellants attempt to turn the doctrine of supervening impracticability on its head and argue that because the business is failing for reasons completely unrelated to the contract in dispute, their obligations should be extinguished. We find no precedent in the law for such an argument, and appellants have provided us with none. Moreover, comment b to § 261 states that the continuation of the financial situations of the parties are ordinarily not basic assumptions which would affect a discharge. Events falling within the coverage of § 261 are generally due either to so called “acts of God” or the acts of third parties. Also, if the event that prevents the obligor’s performance is caused by the obligee, it will ordinarily amount to a breach by the latter and will not be covered by § 261. “[A] party generally assumes the risk of his own inability to perform his duty.” Restatement (Second) of Contracts § 261, comment e. This comment was cited with approval in Craig Coal Mining v. Romani, 355 Pa.Super. 296, 513 A.2d 437 (1986). Having reviewed appellants’ arguments and the relevant authorities, we conclude that the trial court did not err in denying appellants’ motion for a new trial on the basis of the doctrine of supervening impracticability.

Likewise, appellants’ reliance on the doctrine of supervening frustration is misplaced. Comment b to § 265 clearly states that the doctrine applies “only when the frustration is without the fault of the party who seeks to take advantage of the rule.” Further, the illustrations to comment a of § 263 emphasize this point. The trial court did not err in refusing to grant appellants a new trial on this issue.

D.

Finally, Cambridge argues that the trial court erred in charging the jury on when a parent corporation can be held liable for the obligations of its subsidiary, and that the verdict was against the weight of the evidence. We do not address the allegations of error regarding the charge to the jury because they have been waived by appellants’ failure to raise them in the statement of questions involved, as required by Pa.R.A.P. 2116.

The argument as to the weight of the evidence has been preserved. Appellant Cambridge asserts that “[t]he evidence overwhelmingly established that Cambridge carefully maintained the separateness of the two corporations,” appellants’ brief at 37, and that this entitles it to a new trial. We disagree.

A panel of this Court has stated:

A motion for new trial on grounds that the verdict is contrary to the weight of the evidence concedes that there is sufficient evidence to sustain the verdict but contends, nevertheless, that the verdict is against the weight of the evidence. Whether a new trial should be granted on grounds that the verdict is against the weight of the evidence is addressed to the sound discretion of the trial judge, and his decision will not be reversed on appeal unless there has been an abuse of discretion.

Commonwealth v. Taylor, 324 Pa.Super. 420, 425, 471 A.2d 1228, 1230 (1984) (citations omitted). On appeal, this Court must determine “whether the verdict is so contrary to the evidence as to shock one’s sense of justice.” Myers v. Gold, 277 Pa.Super. 66, 419 A.2d 663 (1980). To summarize what we already have noted in Part I.D. of this opinion, appellee testified at trial that the President of Cambridge, Mr. Henry Lange, actively participated in the contract discussions between appellee and Stanhope. R.R. at 229a-231a. Cambridge’s attorney, Mr. Rosenberg, drafted the contract which was eventually signed by the parties. R.R. at 230a. The letter terminating appellee’s agency relationship with Stanhope was signed by Mr. Lange. R.R. at 254a, 296a and 762a. A letter which followed two weeks later, stating Stanhope’s intention to provide appellee with three months severance pay, was written on Cambridge letterhead and signed by Mr. Lange. R.R. at 763a. We find appellant Cambridge’s argument to be wholly without merit and conclude that under the standard articulated in Myers, a new trial is not warranted.

Judgment affirmed.

      . The original record, as certified to us, does not contain the exhibits admitted at trial. Although appellants have included the exhibits as part of their reproduced record, a paper may not be made part of the record simply by reproducing it. Pittsburgh’s Airport Motel v. Airport Asphalt and Excavating Co., 322 Pa.Super. 149, 469 A.2d 226 (1983). The only place in the original record where any of the papers admitted at trial appear, are as "exhibits” to appellants’ brief in support of post-trial relief. The "exhibits” are copies of the agreement at issue, dated October 1, 1979, and the five year extension of the October 1 agreement, dated May 1, 1981. Because the brief in support of post-trial motions and the attached "exhibits” were filed in the trial court, they constitute part of the original record. Pa.R.A.P. 1921; Commonwealth v. Rini, 285 Pa.Super. 475, 427 A.2d 1385 (1981). However, we must limit our review to those matters testified to at trial and the two “exhibits” which appear in the original record. We do not consider those exhibits which appear in the reproduced record, but not in the original record. See Commonwealth v. Williams, 357 Pa.Super. 462, 466, 516 A.2d 352, 354 (1986) ("It is the appellant’s responsibility to provide a complete and comprehensive record to the reviewing court for the purposes of appeal.”)

      . At oral argument, counsel for appellee agreed that the transaction was a bona fide sale.

      . Appellants raised a fifth argument in their motion for judgment n.o.v. relative to this claim, on the basis that Stanhope was entitled to a ruling, as a matter of law, that it was excused from performance under the doctrines of supervening impracticability and supervening frustration. Appellants present the same claim on appeal. As we noted at the outset, we may only consider the evidence actually admitted at trial in reviewing the trial court's denial of a judgment n.o.v. Because the trial court limited appellants to the presentation of offers of proof on the issue, appellants can only point to the following evidence in support of a judgment n.o.v.: "It is undisputed that, at the time it ’sold its assets to L.B. Foster, Stanhope Steel was losing vast amounts of money and its financial position was such that it could not even pay its normal operating expenses.” Appellants’ brief at 28. This allegation, by itself, is insufficient to entitle appellants to the entry of a judgment n.o.v. See our discussion in section II. C. of this opinion.

      . Appellants frame the issue in this manner: "Whether the discontinuance of Stanhope Steel’s business in 1984 extinguished its obligations under a brokerage contract existing between Stanhope and Robert Dorn?” Appellants’ brief at 2. Thus, appellants appear to contend that the act of corporate dissolution, as a matter of law, relieves them from their contractual duty to their agent.

      . The agreement couches the compensation in the following terms: "It is agreed that while you are the exclusive Broker for the territory contemplated by this agreement you shall have a draw of $4,000/month. This draw shall be the commission payable on sales, rentals and purchases aggregating 4,000 tons annually.” The agreement then lists the rate at which the broker’s commissions will be paid.

      . Under Pennsylvania decisions, "the buyer in a requirements contract has no duty to have any requirements and a seller under an output contract has no duty to have any output.” Fort Wayne Corrugated Paper Co. v. Anchor Hocking Glass Corporation, 130 F.2d 471 (3d Cir.1942).

      . The Court found it "unnecessary to decide whether this contract created the relationship of ‘vendor and vendee’ between plaintiff and defendant, or an 'exclusive sales agency’, or ‘a grant of the right to sell the particular commodity within the prescribed territory to the exclusion of all others____’’ Sheesley, 337 Pa. at 202, 10 A.2d at 403.

      . However, the trial court en banc declared that the doctrine of frustration of purpose was inapplicable. McDole, id. 281 Pa.Super. at 82, 421 A.2d at 1157-1158.

      . Appellants’ assertions with regard to McDole and Von Lange more properly apply to the argument that the trial court erred in directing the verdict in favor of appellee. However, we adhere to the structure of appellants’ brief and analyze the cases in terms of the argument for judgment n.o.v.

      . Our Court recently held that a contract of employment for life does not, without more, constitute an enforceable contract of employment for a specific, definite duration. Murphy v. Publicker Industries, Inc., 357 Pa.Super. 409, 516 A.2d 47 (1986).

      . We note that Stanhope’s offer of proof detailed the losses its overall operation experienced in the early 1980’s. Extended analysis of this event, however, obscures the relevant issue of whether enforcement of the contract at issue — between appellee and Stanhope — would be impracticable.

      . Appellants incorrectly cite Olbum v. Old Home Manor, Inc., 313 Pa.Super. 99, 459 A.2d 757 (1983), in support of their argument that the doctrine of supervening frustration applies in the instant matter. In deciding Olbum, our Court relied on principles of commercial impracticability as embodied in the Restatement (Second) of Contracts § 263.

      . Pa.R.A.P. 2116 states that “ordinarilyU no point will be considered [on appeal] which is not set forth in the statement of the questions involved or suggested thereby.” Nothing in appellants’ third question (“Whether Cambridge Industries — Stanhope’s parent corporation — can be held liable for Stanhope’s contractual obligations?”) suggests their intention to raise the issue of an erroneous or prejudicial jury charge.


author: KELLY, Judge:

text:
    534 A.2d 814
    Marc STEEL, D.D.S. v. Steven L. WEISBERG, D.D.S. Appeal of Charles R. WEBER, D.D.S.
    Superior Court of Pennsylvania.
    Argued June 16, 1987.
    Filed Nov. 13, 1987.
    Reargument Denied Jan. 6, 1988.

      Thomas A. Beckley, Harrisburg, for appellant.
    Donald A. Browns, Media, for appellee.
    Before MONTEMURO, KELLY and CERCONE, JJ.
   KELLY, Judge:

This case involves a question of whether certain information is protected from discovery by the Peer Review Protection Act. The trial court found that the information sought is not protected by the Act, and issued a contempt order for appellant's refusal to produce the information at deposition. We affirm.

In March 1983, the plaintiff-appellee, Marc Steel, D.D.S., commenced this defamation action against Steven L. Weisberg, D.D.S. During the course of discovery, plaintiff Steel obtained a copy of a letter written by Weisberg to appellant, Dr. Charles R. Weber, in Weber’s capacity as chairman of the Chester-Delaware Patient Relations Committee of the Pennsylvania Dental Association. Steel filed a notice to take the deposition of Weber, and in response, Weber filed a motion for protective order. On October 5, 1984, the trial court denied the motion.

On April 25, 1986, Steel filed a motion for an order directing Weber to answer questions regarding the letter. On September 12, 1986, the trial court entered an order directing appellant to appear and answer the questions. The deposition of Dr. Weber was scheduled for December 8, 1986; at that time, Weber appeared and again refused to answer questions concerning the letter. As a result, Steel filed a petition for contempt. Weber filed an answer, and, following a hearing on the matter, the trial court entered the following order:

And now, to wit, this 22nd day of December, 1986, it is hereby ORDERED that Dr. Charles R. Weber is found to be in Civil Contempt of Court and is fined the sum of $25.00 conditionally.
Dr. Charles R. Weber may purge himself of Contempt and avoid the necessity of paying said $25.00 by answering all the questions provided to him at his depositions of February 21, 1986 and December 8, 1986.
The above Order has been entered after a Rule attaching Dr. Charles R. Weber was entered requiring his appearance to answer why a Rule Absolute should not be entered that he be found in Contempt; after Answer to said attachment by Dr. Charles R. Weber and Hearing thereon on December 18, 1986; after an Oral Rule Absolute was entered upon Dr. Charles R. Weber; and, after hearing on the Contempt citation and Rule Absolute on December 18, 1986.

It is this order which is now before us on appeal.

Before considering the challenge raised by appellant Weber, we must determine whether the December 22, 1986 contempt order is a final and appealable order.

Unless sanctions are imposed, an order declaring a party in contempt is interlocutory. McManus v. Chubb Group of Insurance Companies, 342 Pa.Super. 405, 493 A.2d 84 (1985); In Re Grand Jury Subpoena to Kevin Roll, 311 Pa.Super. 212, 457 A.2d 570 (1983); Hester v. Bagnato, 292 Pa.Super. 322, 437 A.2d 66 (1981). Unless the order of contempt is final, this Court lacks jurisdiction to entertain the appeal. McManus, supra; Guisler v. Alexander, 307 Pa.Super. 219, 453 A.2d 4 (1982). A threat to hold a party in contempt at some future time if a decree is not performed or a threat to impose sanctions in the future is neither final nor appealable. See McManus, supra; Brodsky v. Philadelphia Athletic Club, 277 Pa.Super. 549, 419 A.2d 1285 (1980).

The order in the instant case declared appellant in contempt and imposed a twenty-five dollar ($25.00) “conditional” fine; appellant was given the opportunity to purge himself of the contempt citation, as well as the obligation to pay the fine, by providing the requested information. We find that the order is final and immediately appealable. Although appellant Weber was given the opportunity to remove the sanction, such a feature is typical of civil contempt orders, which must contain “conditions on the sentence so as to permit the contemnor to purge himself; he must be allowed to carry the keys to the jail in his pocket.” Markey v. Marino, 361 Pa.Super. 92, 98, 521 A.2d 942, 945 (1987); see also Knauss v. Knauss, 387 Pa. 370, 379, 127 A.2d 669, 673 (1956). Here, no further order would be necessary before the sanction would become effective. The order is properly before us for review.

A brief recitation of the facts is necessary. As part of the discovery in his defamation action, Steel obtained a letter dated October 14, 1982, written by Weisberg to Dr. Weber. In the letter, Weisberg accuses Steel of “stealing [Weisberg’s] patients,” “other forms of theft,” and concludes, “[w]ith regards to Dr. Steel’s conduct as a discredit to the profession, I strongly urge that someone with such an obvious lack of integrity be stripped of any licenses to practice dentistry now or in the future.” (Letter of 10/14/82 at 3-4). In response to Weber’s motion for a protective order, Steel stated his intent to limit questioning so as to gain only information regarding the publication of the allegedly defamatory letter to others:

The Plaintiff has no intention of asking any questions concerning any testimony or proceedings before any dental committee. The only questions will be with respect to the receipt of the letter provided by the Defendant and the names of those individuals to whom the letter was distributed.

(Plaintiff’s Answer to Motion for Protective Order at 2). At the scheduled depositions, the questions were in fact limited to the matters described above; the order appealed from directs Weber to answer these questions. With this factual background in mind, we turn to the issue raised on appeal.

Appellant contends that the information sought is protected from discovery by the Peer Review Protection Act (“Act”). Section four of the Act, entitled “[cjonfidentiality of review organization’s records,” provides in part:

The proceedings and records of a review committee shall be held in confidence and shall not be subject to discovery or introduction into evidence in any civil action against a professional health care provider arising out of the matters which are the subject of evaluation and review by such committee and no person who was in attendance at a meeting of such committee shall be permitted or required to testify in any such civil action as to any evidence or other matters produced or presented during the proceedings of such committee or as to any findings, recommendations, evaluations, opinions or other actions of such committee or any members thereof____

63 P.S. § 425.4 (emphasis added).

Preliminarily, we must determine whether appellee Steel seeks discovery of the “proceedings” or “records” of a review committee. The trial court found that the Patient Relations Committee is a peer review committee as defined in the Act, and neither party disputes this contention on appeal. Assuming that a formal meeting regarding Dr. Weisberg’s letter did not take place, we must determine whether Dr. Weber’s receipt of Weisberg’s letter and his possible dissemination of the letter to other committee members constitutes a “proceeding” of the review committee.

The Act nowhere defines the term “proceeding” which is used in Section four of the Act. However, we are persuaded that the logical interpretation is to construe “proceedings” as including the receipt, by a committee member in his official capacity, of a claim regarding a health care provider. The actions of a peer review committee may frequently begin with a claim against a health care provider, referred to one of the committee members. We find that the successful transmission of a letter initiating the peer review process, and distribution of that letter to other committee members, constitutes a proceeding of a peer review committee.

As set forth, supra, Section four of the Act states the general rule that “[t]he proceedings and records of a review committee shall be held in confidence and shall not be subject to discovery ...”. However, Section four of the Act continues:

Provided, however, that information, documents, or records otherwise available from original sources are not to be construed as immune from discovery or use in any such civil action merely because they were presented during proceedings of any such committee, nor should any person ... who is a member of such committee be prevented from testifying as to matters within his knowledge, but the said witness cannot be asked about his testimony before such a committee or opinions formed by him as a result of said committee hearings.

(Emphasis added).

Appellee Steel argues that the information sought by the discovery request, limited to the questions of whether the letter was received and to whom it was distributed, pertains to “matters within [Dr. Weber’s] knowledge,” and is therefore, within the exception to immunity from discovery set forth in Section four of the Act. Appellant Weber would interpret the provision as excepting only those matters which the committee member learned of through non-committee activity; according to appellant’s argument, since Weber learned of the receipt and distribution of the letter while serving in his capacity as chairman of the Patient-Relations Committee, the information is not “within [Dr. Weber’s] knowledge,” as contemplated by the statute, and the exception to immunity from discovery therefore does not apply.

As the relevant provision is susceptible of more than one interpretation, we find that the provision contains an ambiguity. When faced with such an ambiguity, we are bound to ascertain the intent of the legislature. The rules of statutory construction provide that “when the words of a statute are not explicit, the intent of the General Assembly may be ascertained,” 1 Pa.C.S.A. § 1921(c), and “[t]he object of all interpretation and construction of statutes is to ascertain and effectuate the intention of the General Assembly.” 1 Pa.C.S.A. § 1921(a); Hodge v. Hodge, 513 Pa. 264, 270, 520 A.2d 15, 21 (1986). In Pennsylvania Labor Relations Bd. v. State College Area School District, 461 Pa. 494, 337 A.2d 262 (1975), our Supreme Court stated:

Where provisions of a statute appear to be ambiguous or inconsistent, the intention of the legislature may be determined by examining the occasion, reason or necessity for the law. Thus, we should look to the circumstances that existed at the time of the enactment and determine the mischief sought to be remedied or the object to be obtained in its passage.

461 A.2d at 502, 337 A.2d at 266; see also 1 Pa.C.S.A. § 1921(c).

Our task of ascertaining the intent of the legislature is hampered by the fact that minimal legislative history regarding the Act was recorded prior to its enactment in 1974. Furthermore, only one appellate decision has attempted to interpret the Act, and no cases have construed the exclusion provision which is at issue in the case at bar. However, we are not entirely without guideposts to aid us in our task. The words prefacing the Act provide evidence of a general legislative intent to preserve confidentiality: “[providing for the increased use of peer review groups by giving protection to individuals and data who report to any review group.” H.B. 1729, Act of July 20, 1974, P.L. 564, No. 193. “The purpose of the bill is to provide protection to those persons who give testimony to peer review organizations.” Hearing on H.B. No. 1729, 158 Pa.Legis.J.-House at 4438 (1974) (Statement of Representative Wells). “Through these immunity and confidentiality provisions [§§ 425.3, 425.4] ... the Legislature has sought to foster free and frank discussion by review organizations.” Steel v. Weisberg, supra, 500 A.2d at 430.

However, it is clear that the legislature did not intend to provide unlimited protection to persons giving testimony or providing information to peer review organizations; Section 3 of the Act indicates that the protection from liability will not be extended to individuals who deliberately provide a peer review committee with false information. Section 3 provides in part:

§ 425.3. Immunity from liability

(a) Notwithstanding any other provision of law, no person providing information to any review organization shall be held, by reason of having provided such information, to have violated any criminal law, or to be civilly liable under any law, unless:
(2) such information is false and the person providing such information knew, or had reason to believe, that such information was false.

Thus, the legislature did not intend for the Act to serve as a haven from civil liability for individuals who deliberately provide committees with false information. With this observation in mind, we look again to Section 4 of the Act. Appellant requests certain limited facts so as to prove the publication of the false information to committee members. The element of publication is, of course, a necessary element in a defamation action. 42 Pa.C.S.A. § 8343(a)(2). If we were to adopt the construction urged by appellant Weber, the allegedly defamed individual would not be able to prove his case, and the Act would serve to protect from civil liability those persons who knowingly provide the committee with false information. We find that we must reject this interpretation.

In ascertaining the intent of the, legislature, we must consider the practical consequences of a particular interpretation. 1 Pa.C.S.A. § 1921(c)(6); Lehigh Valley Co-Op. Farmers v. Com., Bureau of Employment Sec., 498 Pa. 521, 447 A.2d 948 (1982); Tyler v. King, 344 Pa.Super. 78, 496 A.2d 16 (1985); Royal Indemnity Co. v. Adams, 309 Pa.Super. 233, 455 A.2d 135 (1983). We must presume that the General Assembly intended the entire statute to be effective and certain; in construing a statute, sections of the statute must be construed with reference to the entire statute, and not alone. 1 Pa.C.S.A. § 1922(2); In Interest of Jones, 286 Pa.Super. 574, 429 A.2d 671 (1981). We must further presume that the General Assembly did not intend a result that is absurd, impossible of execution, or unreasonable. 1 Pa.C.S.A. § 1922(1); Lehigh Valley Co-Op. Farmers v. Com., Bureau of Employment Security, supra.

Applying the rules of statutory construction to the instant case, we observe that the practical effect of the construction advocated by appellant would be to protect from civil liability individuals who knowingly give false information to peer review committees. The provisions of Section three must be construed with reference to the other relevant portions of the statute, including the immunity from liability provisions. According to the express language of those provisions, it is clear that the legislature did not intend for the Act to protect such individuals from civil liability. We therefore reject appellant’s proposed construction, as it would generate an unreasonable result, contrary to the intent of the legislature. Instead, we conclude that the confidentiality provisions of the Peer Review Protection Act do not bar the appellee from discovering the limited information requested in this case.

The trial court acted properly in finding that the information requested is discoverable, and in holding the appellant in contempt for failure to produce the requested information. Accordingly, the order imposing sanctions for contempt is affirmed.

Order AFFIRMED.

      . Act of July 20, 1974, P.L. 564, No. 193, as amended October 5, 1978, P.L. 1121, No. 262, 63 P.S. §§ 425.1-.4 (Purdon Supp.1987).

      . The committee is a peer review committee as defined in the Peer Review Protection Act, 63 P.S. § 425.2.

      . Appellant Weber appealed the denial to this Court, which quashed the appeal as interlocutory. Steel v. Weisberg, 347 Pa.Super. 106, 500 A.2d 428 (1985).

      . As Dr. Weber refused to answer any questions in this regard, we are unable to ascertain from the existing record whether a formal committee meeting did in fact take place. We shall assume arguendo that a formal committee meeting did not take place.

      . See Sanderson v. Frank S. Bryan, M.D., LTD., 361 Pa.Super. 491, 522 A.2d 1138 (1987), discussed further, infra at fn. 6.

      . In the recent case of Sanderson v. Bryan, supra, a panel of this Court addressed the question of whether Section four of the Act prohibits a medical malpractice plaintiff from discovering hospital peer review information which is not associated with plaintiffs cause of action, including complaints against the defendant doctor by other patients; the Court concluded that discovery of such information is prohibited. The panel sought to ascertain the meaning of the clause in Section 4 which states that the records of a review committee shall not be discoverable in an action against a health care provider ‘‘arising out of the matters which are the subject of evaluation and review by such committee ...". Regarding the legislative history of section four, the panel observed:
      The discussion at the May 7, 1974 hearing centered around the potential for misusing the peer review process to make false charges against the person subject to review. Though such action is prohibited under section three of the Act, a strict application of section four, as drafted, would have prohibited the person being reviewed from discovering the nature of the charge against him as well as the identity of the person making the charge. Concern was expressed that a ‘star-chamber type inquiry’ would evolve. Hearing, at 4438-39 (statement of Representative McCue). Thus, we believe that the addition of the clause now at issue was designed to respond to the concern of the legislature in its May 7, 1974 hearing.
      522 A.2d at 1142-3.

      . We further observe that this construction does not conflict with the underlying purpose of a peer review committee, which is to improve the quality of services provided by health care professionals. 63 P.S. § 425.2.


author: CAVANAUGH, Judge:

text:
    534 A.2d 819
    Betty BURKETT, Appellee, v. ALLSTATE INSURANCE COMPANY, Appellant.
    Superior Court of Pennsylvania.
    Argued Sept. 2, 1987.
    Filed Nov. 25, 1987.

      David M. McCormick, Philadelphia, for appellant.
    Peter G. Goodman, Philadelphia, for appellee.
    Before CAVANAUGH, ROWLEY and MONTEMURO, JJ.
   CAVANAUGH, Judge:

The issue involved in this case is whether the court below erred regarding the law or abused its discretion in refusing to open a default judgment entered in favor of the plaintiff. A civil action was commenced by Betty Burkett, the plaintiff below, who is the appellee herein, against Allstate Insurance Company, the appellant. The basis of the complaint was an alleged breach of contract entered into between the appellee and the appellant concerning settlement of a case. The complaint, which was endorsed with a notice to plead, was filed on July 10, 1986 and the appellant was served on July 18, 1986. Subsequently, counsel for the appellant entered his appearance and also wrote to counsel for the appellee stating: “I note that the period within which to plead or otherwise move is about to expire and therefore respectfully request that the defendant, Allstate Insurance Company, be granted a reasonable extension of time within which to plead or otherwise move. If I do not hear from you to the contrary, I shall assume that such an extension has been granted.”

On or about August 4, 1986 counsel for the appellee responded stating:

“I am in receipt of your letter dated July 24, 1986 requesting an extension of time to plead or otherwise move to plaintiffs complaint. Please be advised that I will grant an extension of time until August 18, 1986 to answer the plaintiffs Complaint. I will not grant any extensions of time to otherwise move to plaintiffs Complaint.”

The appellant did not file an answer or other pleading or motion by August 18, 1986 and on August 21, 1986 the appellee filed a praecipe with the prothonotary directing the entry of judgment by default against the appellant. On September 12,1986 the appellant filed a petition to open the judgment which was denied by the court below speaking through DiBona, Jr., J. by order of December 19, 1986. It is from this order that an appeal has been taken.

A petition to open a default judgment is addressed to the equitable powers of the court and the grant or denial of the petition is within the discretion of the court. Provident Credit Corp. v. Young, 300 Pa.Super. 117, 446 A.2d 257 (1982); Schultz v. Erie Insurance Exchange, 505 Pa. 90, 477 A.2d 471 (1984); Autologic, Inc. v. Cristinzio Movers, 333 Pa.Super. 173, 481 A.2d 1362 (1984). In order to grant a petition to open a default judgment, the following factors must coalesce: (1) the petition to open must have been promptly filed; (2) a meritorious defense must be set forth and (3) there must be a reasonable explanation for failing to respond. Levy Estate v. CNA Insurance Company, 338 Pa.Super. 191, 487 A.2d 919 (1985); Explo, Inc. v. Johnson and Morgan, 295 Pa.Super. 133, 441 A.2d 384 (1982). Also, the court’s refusal to open a default judgment will not be reversed unless there has been an abuse of discretion or error of law. Maurice Goldstein Co. v. Margolin, 285 Pa.Super. 161, 427 A.2d 162 (1980); Schultz v. Erie Insurance Co., supra; Vision Service Plan v. Pennsylvania AFSCME Health and Welfare Fund, 326 Pa.Super. 474, 474 A.2d 339 (1984). Accordingly, "... our scope of review on appeal from the lower court’s grant or refusal to open a judgment by default is a narrow one.” Carson Pirie Scott and Co. v. Phillips, 290 Pa.Super. 353, 356, 434 A.2d 790, 791 (1981).

The court below found that the appellant had promptly filed the petition to open and had set forth a meritorious defense to the action. We agree that the petition was promptly filed as it was filed approximately 22 days after the entry of the default judgment. “The law does not establish a certain number of days which constitutes a cutoff point between a prompt filing of a petition to open and one which is not timely filed.” King v. Evans, 281 Pa.Super. 219, 224, 421 A.2d 1228, 1230 (1980). In some cases it is evident that the petition to open has been promptly filed. In DiNenno v. Great Atlantic & Pacific Tea Company, 245 Pa.Super. 498, 369 A.2d 738 (1976) the petition to open was filed fifteen days after the entry of a default judgment, and we held that “clearly the petition to open was promptly filed.” 245 Pa.Super. at 500, 369 A.2d at 739. See also Quaker Transit Company, Inc. v. Jack W. Blumenfeld & Company, 277 Pa.Super. 393, 419 A.2d 1202 (1980) in which this court held that a petition to open filed fourteen days after the default judgment had been entered was timely filed. The court below properly determined that the petition to open was timely.

Further, a meritorious defense was posited as the appellant contended that the complaint did not set forth a cause of action. The defendant must allege an arguably meritorious defense sufficient to justify relief if proven. Alexander v. Jesray Construction Co., 237 Pa.Super. 99, 346 A.2d 566 (1975). See also Provident Credit Corporation v. Young, supra. The meritorious defense need not be proved at this state of the proceedings. Shainline v. Alberti Builders, Inc., 266 Pa.Super. 129, 403 A.2d 577 (1979). However, it must be set forth in precise, specific and clear terms. Sines v. Packer, 316 Pa.Super. 500, 463 A.2d 475 (1983). The test of a posited meritorious defense was clearly met. The defendant contended in the petition to open that the complaint did not set forth a cause of action and specifically that no settlement agreement was reached as the appellee had refused to sign an appropriate release.

The court below found that there was no reasonable explanation for failing to timely file a responsive pleading. We disagree with this conclusion and find that the court erred in not opening the default judgment.

In determining whether there was an adequate excuse for the appellant’s failure to file a responsive pleading, we must determine the applicability of Pa.R.C.P. 237.1. We have recently held that the failure of the party entering a judgment by default to comply with Pa.R.C.P. 237.1 constitutes such an excuse in connection with a petition to open a default judgment. Rounsley v. D.C. Ventre and Sons, Inc., 361 Pa.Super. 253, 522 A.2d 569 (1987). For the reasons set forth below, we have concluded that the appellee did not comply with Pa.R.C.P. 237.1 which provides in pertinent part:

Rule 287.1. Notice of Praecipe for Entry of Default Judgment

(a) No judgment by default shall be entered by the prothonotary unless the praecipe for entry includes a certification that a written notice of intention to file the praecipe was mailed or delivered to the party against whom judgment is to be entered and to his attorney of record, if any, after the default occurred and at least ten days prior to the date of the filing of the praecipe. If a written agreement for an extension of time specifies a time within which the required action must be taken and a default occurs thereafter, judgment by default may be entered by the prothonotary without prior notice under this rule. A copy of the notice or agreement shall be attached to the praecipe. (Emphasis Added.)

Pa.R.C.P. 237.1 must be strictly construed. Academy House Council v. Phillips, 312 Pa.Super. 364, 458 A.2d 1002 (1983). In addition, “the rule is mandatory in nature.” N.H. Weidner, Inc. v. Berman, 310 Pa.Super. 590, 595, 456 A.2d 1377, 1380 (1983).

The court below determined that the appellee fully complied with Rule 237.1 as a written agreement had been entered into between the parties concerning an extension of time and specifying “the time within which the required action must be taken” and a default occurred thereafter. We cannot agree with this conclusion. Our analysis discloses that no agreement was reached by counsel for the parties. The attorney for the appellant asked for a “reasonable extension of time within which to plead or otherwise move.” (Emphasis added.) The attorney for the appellee did not grant this request, but instead stated that he would “grant an extension of time until August 18, 1986 to answer the plaintiffs Complaint. I will not grant any extension of time to otherwise move to plaintiffs Complaint.” (Emphasis added.) We note that the appellant’s counsel sought an extension of time not merely to file an answer but “to plead or otherwise move.” Under Pa.R.C.P. 1017 the appellant could have filed an answer or preliminary objections to the complaint. He was not limited to filing an answer, and in fact the court below pointed out that part of the appellant’s argument for opening the default judgment would have constituted the basis for a preliminary objection. The salient point is that there was no agreement between the attorneys for the parties, as counsel for the appellee only granted an extension of time in which to file an answer and specifically refused to grant an extension of time for the filing of any other pleading. The test for enforceability of an agreement is whether both parties have manifested an intent to be bound by the terms of the agreement and whether the terms are sufficiently definite and whether consideration existed. Channel Home Centers v. Grossman, 795 F.2d 291 (C.A. 3 1986). In the written agreement contemplated under Pa.R.C.P. 237.1 there is no legally sufficient consideration required in the usual sense of contract law. An agreement is enforceable where the parties intended to conclude a binding agreement and the essential terms of the agreement are certain enough to provide the basis for an appropriate remedy. Linnet v. Hitchcock, 324 Pa.Super. 209, 471 A.2d 537 (1984). What is clearly lacking in the exchange of writings between counsel for the parties in the instant case is the mutuality of assent. Lawyers, especially, should recognize that a “written agreement” must manifest in unequivocal language the mutual understanding reached by the parties. Simply stated, counsel for the appellant’s request for a “reasonable extension of time within which to plead or otherwise move ”, was denied by counsel for the appellee. Even though there was an exchange of letters, no agreement was reached. In the absence of a written agreement between the parties, counsel for the appellee was required to comply with Pa.R.C.P. 237.1 requiring the giving of notice of the intention to file a praecipe for the entry of a default judgment in a form that substantially complied with Pa.R.C.P. 237.1(c). Such notice was not given.

The reason for Rule 237.1 is that the law does not look with favor on “snap” judgments. McPherson v. Tube City Taxicab Co., 321 Pa.Super. 144, 467 A.2d 1170 (1983); Queen City Electrical Supply Co. v. Soltis Electric Co., 491 Pa. 354, 421 A.2d 174 (1980). Prior to the adoption of Pa.R.C.P. 237.1, the entry of snap judgments without notice was strongly disapproved by this court and the lack of notice was frequently singled out as an important factor justifying the opening of a default judgment. See Explanatory Note to Pa.R.C.P. 237.1. The purpose of Rule 237.1 is to assure that a default judgment is not entered without prior notice to the defendant. Brown v. Great Atlantic & Pacific Tea Company, 314 Pa.Super. 78, 460 A.2d 773 (1983).

There must be strict compliance with Pa.R.C.P. 237.1. A written notice of intention to file a praecipe must be given in accordance with the rule before the entry of a default judgment. The exception to this is where both parties enter into a written agreement as described in Rule 237.1(a). The giving of written notice of intent to file a praecipe is an ex parte matter and requires no action by opposing counsel. However, if the party seeking to enter a default judgment elects to refrain from the giving of a written notice, then an agreement between the parties must be entered and this requires a manifestation of mutual assent to the terms of the agreement. This is the more difficult route to follow than the giving of notice in accordance with the form set forth in Pa.R.C.P. 237.1(c) as the forging of an agreement between opposing counsel may be wrought with difficulty. The failure of the appellant to comply with Pa.R.C.P. 237.1 in this case precluded the entry of judgment by default and the court below erred regarding the law in not opening the default judgment.

Order reversed and judgment by default is opened.

      . Pa.R.C.P. 1026 provides, inter alia:
      Rule 1026. Time for Filing. Notice to Plead
      (a) Except as provided by subdivision (b), every pleading subsequent to the complaint shall be filed within twenty days after service of the preceding pleading, but no pleading need be filed unless the preceding pleading contains a notice to defend or is endorsed with a notice to plead.
      Under this rule the appellant was required to file a responsive pleading to the complaint by August 7, 1986.

      . Pa.R.C.P. 237.1(c) provides:
      (c) The notice required by subdivision (a) shall be substantially in the following form:
      (CAPTION)
      To:_
      (Defendant)
      Date of Notice: _
      IMPORTANT NOTICE
      YOU ARE IN DEFAULT BECAUSE YOU HAVE FAILED TO TAKE ACTION REQUIRED OF YOU IN THIS CASE. UNLESS YOU ACT WITHIN TEN DAYS FROM THE DATE OF THIS NOTICE, A JUDGMENT MAY BE ENTERED AGAINST YOU WITHOUT A HEARING AND YOU MAY LOSE YOUR PROPERTY OR OTHER IMPORTANT RIGHTS. YOU SHOULD TAKE THIS NOTICE TO A LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE FOLLOWING OFFICE TO FIND OUT WHERE YOU CAN GET LEGAL HELP:
      (Name of Office)
      (Address of Office)
      (Telephone Number)
      (Signature of Plaintiff or Attorney)
      (Address)

        The appellee did not give the notice referred to in Pa.RX.P. 237.1(c).

      . Pa.RX.P. 1017 provides in part:
      Rule 1017. Pleadings Allowed
      (a) The pleadings in an action are limited to a complaint, an answer thereto, a reply if the answer contains new matter or a counterclaim, a counter-reply if the reply to a counterclaim contains new matter, a preliminary objection and an answer thereto.
      (b) Preliminary objections are available to any party ...

      . As pointed out in the Explanatory Note to Pa.R.C.P. 237.1 “A written agreement of extension need not be formal. An exchange of letters between counsel will suffice. But any agreement should be sufficiently specific to avoid argument over its terms. (Emphasis added.)

      . We note that in the case before us, counsel for the appellee gave no indication of an intent to enter a default judgment, but even if he had the requirements of 237.1 would not have been met in the absence of an agreement. In N.H. Weidner, Inc. v. Berman, 310 Pa.Super. 590, 456 A.2d 1377 (1983) counsel for plaintiff wrote to counsel for defendant after the time for filing a responsive pleading had passed, stating that if he did not have anything in the next two weeks, he would assume that he should feel free to enter a default judgment. This court, speaking through Montemuro, J., found that there was no written agreement and the default was not entered "in accordance with the mandatory requirements of Pa.R.C.P. 237.1.” 310 Pa.Super. at 599, 456 A.2d at 1382. Similarly, in Giallorenzo v. American Druggists' Insurance Co., 301 Pa.Super. 294, 447 A.2d 974 (1982) we found that in the absence of a written agreement, even where counsel for plaintiff wrote to counsel for defendant after the time for filing a responsive pleading had passed that he would enter a default judgment if an answer was not filed within 10 days, that this did not satisfy the rule. In our case, we have neither a written agreement or any warning concerning the entry of a default judgment.

      . Nothing in our discussion concerning Pa.RX.P. 237.1 is meant to detract in any way from the necessity of compliance with Pa.R.C.P. 1026 concerning the time for filing responsive pleadings. Failure to comply with Pa.R.C.P. 237.1 bars the entry of a default judgment, but the mandate of Pa.R.C.P. 1026 remains intact.