It was very difficult to determine whether the seller and the buyers, Jon D’man and Marsha Mellow, had a contract with each other to purchase the seller’s home. The reason why was that each party was acting on their own accord without notifying each other of what had been discussed and agreed upon. However, I concluded that there was not a contract between the seller and the buyers. I would now like to give a brief summary and discuss how I concluded that there was no contract.
When Jon and Marsha sent their initial offer, it was accepted only if the terms and conditions from Addendum 1 were met. This Addendum was rejected by Jon and Marsha when they sent in a counter offer (addendum 2) with their terms and conditions. The seller accepted the counter offer for Addendum 2 and sent her acceptance through the mail. The seller later regretted her decision and called the buyers to inform them that she would no longer be selling her house for any price. However, the mailbox rule states, “acceptance takes effect, thus completing formation of the contract, at the time the offeree sends or delivers the communication via the mode expressly or impliedly authorized by the offeror,” (Miller, 2017). This means that she could not take back the acceptance for the sale. However, she had not yet finalized the sale of her house by signing the final contract.
However, right after the buyers sent their offer, they realized that the house had increased in market value due to a development that would soon be built a few blocks away from the seller. The buyers immediately called the seller’s broker and accept the original offer from Addendum 1. The broker accepted the offer on the spot, without informing the seller, and congratulated the buyers on purchasing their new home. That same day the seller received a call from a UB agent (buyer #2), who offered the seller $300,000 cash with no conditions and wanted to close in 10 days. The seller accepts the offer without knowing that their agent had accepted an offer from Jon and Marsha.
The issue that the seller and buyers run into her is that both addendums 1 and 2 have been accepted, and another offer from the UB agent has been accepted. Each party in this case had a different understanding as to what the contract was, who was going to purchase the house, and for how much. The Broker and the seller had thought that they were in a contract with different people and had verbally agreed on the sale of the house.
Ultimately, I decided that there was no contract due to two reasons that the seller could use as defenses to enforceability of the contract. My first reason is based off the statute of frauds. According to the statue of frauds, “certain types of contracts, to be enforceable, had to be evidenced by a writing and signed by the party against whom enforcement was sought,” (Miller, 2017). Any contracts including land must be in writing, and neither of the final offers were in writing and therefore could not be enforced. I do understand that the seller had accepted the offer from Addendum 2, but the final contract had not been signed, and I decided that there was not a contract because there wasn’t a meeting of the minds with each of the parties on what the contract was. I considered the acceptance of the offer as a preliminary agreement that was not binding because essential terms of the contract had not been fully agreed upon because the seller and buyer both agreed on both addendum 1 and addendum 2.
The second reason is that the land in the contract was not specific enough as to what the property looked like. Miller explains, “Generally, for a land sale contract to be enforceable under the Statute of Frauds, the contract must describe the property being transferred with sufficient certainty for it to be identified.” The only description that was included in the contract was the physical address, which is not enough of a description according to the statue of frauds referring to the sale of land.
In this case there are some remedies that Jon and Marsha could request the court to grant them. They could seek Monetary damages or specific performance from the seller. One main reason Jon and Marsha may seek specific performance is because the house and land are unique, and it might be everything that Jon and Marsha were looking for and wanting. Every piece of land is unique, and you cannot get the exact same land anywhere else. The other remedy that Jon and Marsha could seek is monetary damages. As explained by Miller, “only when specific performance is unavailable (such as when the seller has sold the property to someone else) will monetary damages be awarded instead.” I think that a court could award Jon and Marsha either of these remedies because Jon and Marsha believed that there was a contract because the seller had accepted their offer and the seller’s agent had verbally accepted their offer over the phone. However, If the home ended up being sold to the UB flash agent, Jon and Marsha can request monetary damages because specific performance is not an option.
In this case I think that both the Seller’s and the Buyer’s brokers did them disservices. First, I think the Buyer’s broker should have known that the address of the house is not a good enough description when purchasing land. A detailed description should have been written on the offer to ensure that there was no doubt on which property the offer was for. As for the seller’s broker, they did not perform their duty of notification. The Seller’s broker should have notified them to let them know that the buyers had accepted the offer from Addendum 1 before they had accepted the offer. The Agents in this case should have consulted with their clients and then consulted with each other, as agents, to ensure that everyone was on the same page. If the agents worked together to ensure that everything was in order, I think I would have said that there was a contract, but because each party was working on their own and had a different idea as to what the contract was, I concluded that there wasn’t a contract.
As I stated earlier, it was a difficult decision on whether there was a contract, and how this situation could be remedied. Due to the confusion and actions from both the buyer and the seller I ruled that the profits would be split between the buyer (Jon and Marsha) and the seller. I decided that the UB agent would get nothing because there wasn’t a real contract, only a verbal one.
I decided that the profits would be split between the buyers and the seller because neither party followed the correct and binding legal process. I concluded that the seller will maintain ownership of property and can sell the property at their discretion. The seller will receive 30% of the profits and the seller will receive 70% of the profits. Because the home was going to increase in value so drastically and because of the confusion with the acceptance of offers and written documentation. I ruled that the buyers would receive 70% of the profits of the possible future gain, had they purchased the house. The 70% will come from the difference between what had been agreed upon in addendum #2 and the new value of the home. This value will include the $100,000 price increase due to the new development that will be built. I know that others might decide differently on this case, but I thought that this would be the right ruling because the home would have been the buyers if the correct legal process had been followed, and they would have earned the full amount of the profits if they had been the owners of the home.
- Miller, Roger LeRoy. Business Law: Text & Cases – An Accelerated Course. 14th ed.