The success of the suit against Dan will
depend on whether the agreement between the parties is enforceable under
contract law. As the analysis that follows would reveal, an arrangement must
meet a number of requirements.
A.
Applicable
law. A contract can either be governed by Article 2 of the Uniform Commercial
Code (UCC) or by the rules of the common law on contracts. UCC article 2 only
applies to the sale of goods which are defined as movable. All other
arrangements not falling within that category are governed by the common law on
contracts (Twomey & Jennings, 2011). The subject matter of the arrangement
between Pat and Dan was a house which is an immovable property. As such, the
rules of the common law would apply.
B.
Was
there an agreement between the parties? By its very definition, a contract
simply stands for enforceable obligations. Thus, the presence of an agreement
is the first requirement for the existence of a contract. This only happens if
there is an offer and acceptance.
1. Was there a valid offer capable of
acceptance? It is through an offer that one of the parties expresses their
willingness to enter into contractual obligations. It was held in Glass Service Co. v State Farm Mutual Automobile Ins. Co that the offeror must intend
to be bound for an offer to be valid with the test for determining that
intention being an objective one. Dan knowing that Pat was seriously in need of
buying a home must have intended that his offer, if accepted by Pat, would bind
them. A distinction, must, however, be made between an offer and an agreement
to make at a future date as per the holding in Hewitt Associates, LLC v Rollins,
Inc...Dan may be tempted to pursue
this line of argument in support of his position. It is a line of argument not
likely to hold given that their arrangement seemed to have provided all the
important requirements. For instance, Dan was committing to sell to Dan at $
250,000.
i.
Was the
offer and the resulting contract definite? Courts are generally reluctant to
enforce arrangements in which it is difficult to tell the intention of the
parties. Thus, it is an important
requirement that all the important matters are provided for. In Re Hubert Plankenhorn, the court
declined to enforce an agreement where it thought that the parties were not in
agreement on the quality of the work. An arrangement may, neverless, leave out
minor and non essential terms and still meet the requirements as was held in Hsu v Vet-A-Mix, Inc. It would plausible
for Dan to argue that there was no agreement on the amount of the commission as
the word ‘fair’ in their arrangement is open to different interpretations. This
issue is indeed important given that the commission might have been the most
important motivation for Dan to get into the deal. Nevertheless, a fair
commission was clear enough to allow the parties to fix the actual figures
using the market conditions. An argument can also be made that the failure to
fix the date upon which Pat was to find the money to purchase the house give
room for each of the parties to run away from the arrangement. This argument is
weakened by the fact that Dan must have known that Pat was expecting some money
in a short while. In any case, the money came only 11 months after their
arrangement.
2. Did Pat validly accept Dan’s offer? The law
does not insist on any particular form of acceptance except that it should be
clear from the facts that one intends to be bound(Twomey & Jennings, 2011).
Given how seriously she was in need of buying a home, it is only likely that
Pat actually intended to be bound when she entered into the oral arrangement
with Dan. This was a valid acceptance.
3. Conclusion. It follows from the foregoing
analysis that the arrangement between the parties actually satisfied the
requirements for a valid agreement. This is borne from the fact that there was
a valid offer that was validly accepted.
C.
Did
each of the parties provide consideration for the agreement? Parties may enter
into a valid agreement but the court will still refuse to enforce such an
agreement unless there is consideration. This is simply what each party gives
up to the other in making the agreement. A number of cases such as Brooksbank v Anderson have defined it in terms of a bargained for exchange (Twomey
& Jennings, 2011). At one level, the amount of $ 250,000 that Pat agreed to
pay in return for Dan’s conveyance of the house could be seen as sufficient
consideration. This was mutual with Dan’s conveyance of the same house. An
issue, however, arises concerning the blank statement arrangement where Dan was
only to sell to Pat ‘when you come up with the money.’ One may as well conclude
that Pat provided no consideration in exchange for Dan not selling the house to
any other person until the money became available. Courts rarely enforce such
illusory promises. The better approach, however, is to look at the arrangement
as a single contract so that Pat’s promise to pay ‘a fair commission’ was the
consideration for which Dan was to avoid selling the house to any other person
except Pat. In any case, Pat can raise
the doctrine of promissory estoppel to cover for the eventuality that she never
furnished any consideration. Under the doctrine, a promisor is prevented from
asserting a lack of consideration on the part of the promise if a number of
conditions are met.
Neuhoff v Marvin
Lumber and Cedar Co
identified four main requirements that one must show to succeed under
promissory estoppel (Twomey & Jennings, 2011). First, the promisor must
make a promise that lacks consideration. In the arrangement between Pat and
Dan, either of them can be seen as a promisor who made promises. Secondly, the
promisor must intend or reasonably expect that the promise will rely on the promise.
Pat and Dan each intended or must have reasonably expected to act on each
other’s promises. Thirdly, the promise must actually rely on the promise in
some substantial manner. In the present case, Pat indeed relied on Dan’s
promise as evidenced by her decision to move into the house as well as the
monthly checks she was sending. Lastly, the court must be satisfied that
enforcing the promise is the only way of avoiding injustice. This is somehow
complex given that one may argue that there are other avenues available to
secure justice. For instance, Pat may be paid damages to look for another
property.
D.
What is
the consequence of the agreement being oral as opposed to writing? Under the Statute of Fraud, certain agreements are
unenforceable unless they are evidenced in writing. For instance, an agreement
to sell land or an interest in land such as the one in which Pat and Dan
entered into must be in writing (Twomey & Jennings, 2011). Absent any
further analysis, neither Pat nor Dan can enforce their oral agreement. One
exception to the writing requirement is the doctrine of part performance where
the court can enforce an oral contract if the buyer has taken possession of the
land and or has made improvements. Pat can easily rely on this exception given
that she had used $ 8,000 to improve the home. A court of equity may easily
grant her an order for specific performance.
Reference
Twomey,D.P. & Jennings,M.M.(2011).Anderson’s Business Law and the Legal
Environment,21st Edition.Mason,
OH:South-Western Cengage Learning.
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